Short Strangle Option Strategy - How To Make Adjustments

[@warever37]

if the stock is going down, and u adjust the Call side to make it closer to the market, this doesn't mean ur Put side's Prob. ITM is gonna decrease, and even if the BEP on the down side has moved to a lower level, this doesn't guarantee not getting assigned on ur Put if it gets ITM.

[@lakayonx]

Ok, then at what point do you adjust the "losing side" of your position? sorry, I didnt get that very clear. Thank you.

[@OptionAlpha]

See our podcast on that here which might help: optionalpha.com/show72 which is going live this coming Monday.

[@keyholder7780]

Great video man. Was wondering if it would make sense to keep going back and forth (raising the put side when there's an increase and rolling the call down when there's a decrease in prices) all the way to the option expiration date?

[@OptionAlpha]

You could but in doing so you'd just have to be careful not to get too close since you'd be reducing your break-even points on both sides.

[@nkharinarayanan14]

thanks for a good input

[@elistn]

Great and important video, thank you! After the roll in the SPY example, we have a short put leg with 30 delta, and a short call leg with 15 delta.... so we're no longer neutral, right?

[@OptionAlpha]

Not completely no but the adjustment is meant to help re-center the strategy and reduce risk.

[@satsirikhalsa1397]

could you sell short 100 shares if the stock is dropping toward your put, turning it into a covered put?

[@OptionAlpha]

You could yes but that would be a really capital intensive way to do cover it - why not choose a deep ITM put that is much cheaper and behaves like short stock right.

[@gongthepbunyong6563]

Hi My problem is when I'm trading index option the stock fall too fast so the money I get from short call don't cover the lose from short put. How can I solve this problem? And is there a problem if I roll the Short call over and over so it's lower than short put I made int the first place. And what's the end?

[@OptionAlpha]

Gong Thepbunyong You can't if the stock falls that fast you just have to keep rolling it down and eventually the probabilities work themselves out. Sure you might have a big loser here or there but long-term it all evens out.

[@invitebig]

What if the stock price drops below the short put option, do you go inverted? If so, how far away do you want to adjust your short call from the price of the stock?

[@OptionAlpha]

You'd only go inverted if your total credits up to that point are more than the width of the inverted spread.