/biz/ - Business & Finance

>>19052179

>So in this case the position size is the amount of credit received?
No, the position size is how much liquid (money) you have to spend, to actually create the spread

So for example, If I purchased a a Call contract with a $5 Premium, and sold a Contract for 8$ premium, I would have a credit to my account of $3, ( $8 received - $5 paid= $3 received )
However, you still had to spend money to actually create the spread and receive a credit (If you're doing a credit spread) It's the same applicability to a Debit spread (whereas you have a Debit from your account rather than a Credit).

So the position size is what we PAY to own the contract / spread.

>Also do you use stop losses or do you adjust your position as the trade develops?
I do both, management of trades is part of the game, since I trade off of probability and know a few of my trades are destined to be losers, I don't always need a stop loss, then again I have the time to regularly go over what I have. This is honestly up to personal preference (which some could argue but that's up to how you trade since there's so many variables) Your best bet would be using a Stop Loss/Limit Order or a Stop Limit Order, make sure you understand how all order types work and there benefits. It's definitely more complicated than just use it or don't (you'll learn why trust me) If you're not always available to manage positions, that's exactly what they are there for, input your predictive decisions about what you believe is a profitable target / exiting target and go from there.

Adjusting positions is definitely more complicated since you can either use adjustments laddering wise to improve a spreads profit, or hedge against potential losses. I don't make many adjustments though, it adds complexity which I try to avoid to streamline my process since there are always a slew of trades I have regularly expiring that I have to watch over. Managing positions can make them SO much more profitable.