Debit Spread Adjustments

Learn how to adjust debit spreads if implied volatility rises during the trade.
Debit Spread Adjustments
Kirk Du Plessis
Apr 19, 2021

Because debit spreads are low probability strategies that we should use sparingly in our portfolio, there are a few reasons to adjust these 50-50 bets to begin with. In fact, we might adjust 1 or 2 all year out of 50+ trades to give you an idea of how little we tweak them. There is one instance that we'll present in this video where an adjustment to this type of strategy might make sense if implied volatility rises during the process of the trade. And of course with high IV we'll have the choice to sell options and take in a credit to reduce risk.

No tags found.
Next lesson
Butterfly Adjustments
Butterfly strategies give you flexibility to exit a trade profitably. Learn how to adjust butterfly positions to maximize your win rate and reduce risk.

Trade smarter with automation