Lesson Overview

Put Spread Adjustments

After entering on a put credit spread trade, if you have a stock that continues to fall against your position the first adjustment that you should make is to sell a corresponding call spread above the market and take in more credit.

Similar to how we mechanically make this adjustment with credit call spreads, the trigger for this adjustment in our system is when the short put strike reaches a 0.30 delta.

When you keep the number of contracts exactly the same as well as the width of the strikes you take no additional risk and increase your possible profit should the stock remain range bound inside your new iron condor.

More Discussion

Was This Helpful? Add Comments/Questions

  • You’re correct you’re chance of winning on the trade goes down with the adjustment but what’s the goal in the first place right? You’ve got a trade that is moving against you so you’re first goal is reduce risk and minimize the loss. Stop the bleeding. Long-term this is the best strategy and cuts the risk dramatically.

  • Would adjust the same – add the call side and then roll in as needed.

  • Yep you could and I would not adjust it too much – so maybe one spread and done. If it keeps going against me I just let it go to expiration, take the loss and move on.

eBook Download

The "Ultimate" Options Guide

Ultimate Options Strategy Guide

The step-by-step guide on how to set up each of the top 18+ options strategies we trade to generate monthly income. Read the whole strategy guide in less than 30 mins and have it forever to reference.

Download PDF

Join More Than 47,345 Members

Membership is always free & you can upgrade anytime to unlock our live trades.