The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to answer the question, “How to manage options spreads?” The root of this question in managing options spreads comes from the assumption that in order to be profitable trading, we need to be very active or super active in managing options spreads, either managing potential profitable positions or on the other hand, managing potential losing positions. I take maybe an alternative approach to managing spreads in that if you are trading a spread option strategy which would include credit spreads, iron butterflies, iron condors, etcetera, you are defining your risk on that trade by the width of the spreads that you’re trading. When you enter a credit spread or an iron condor trade, you can define how wide that options spread trade is going to be and therefore, you are defining whether you know it or not, the amount of risk that you are willing to take on that position. Now, since we know from our researc