Truth be told, I'm not a "debit spread" guy, namely because I look at them as "one and dones" -- they either work or they don't; rolling these out for duration generally costs more money, and I don't like paying to roll, so I look at them as "one shots."
Here, I looked for a risk one to make one metric for the setup ... .
Metrics:
Max Profit: $105/contract
Max Loss/Buying Power Effect: $95/contract
Break Even: 12.45
Notes: This is a debit spread, which you pay to put on. What you pay to put it on (a debit), is your max loss of the setup, but you certainly don't need to allow it to go to max loss to take it off, especially if it becomes apparent that it's just not going to work by expiry.
As far as take profit is concerned, I would probably shoot for taking it off at 50% max, although the way volatility's been trundling along here (at extremely low levels), I'd also look at taking my money at running at anything north of VIX ~ 15. After all, it hasn't seen fit to break that level since election-time ... .
Here, I looked for a risk one to make one metric for the setup ... .
Metrics:
Max Profit: $105/contract
Max Loss/Buying Power Effect: $95/contract
Break Even: 12.45
Notes: This is a debit spread, which you pay to put on. What you pay to put it on (a debit), is your max loss of the setup, but you certainly don't need to allow it to go to max loss to take it off, especially if it becomes apparent that it's just not going to work by expiry.
As far as take profit is concerned, I would probably shoot for taking it off at 50% max, although the way volatility's been trundling along here (at extremely low levels), I'd also look at taking my money at running at anything north of VIX ~ 15. After all, it hasn't seen fit to break that level since election-time ... .
