What do we do after gap down?

Creators
21

I am sitting on a vertical spread already, and waiting for the expiry.

How these spreads can give profitability in intraday? whenever there is divergence in the price, one of the leg the liquidity vanishes, and bid/ask spread moves away from LTP substantially. Precisely, Is there any way to get out of these spreads without waiting till expiry?

22

This happens if the spread moves into ITM which are normally illiquid with wide bid/ask. As with all spreads, vertical spread also requires managing the legs sometimes.

I do the following to over come the problem

  1. Try OTM credit spreads
  2. Leg in and leg out(i use this for all strategies but risky…)
  3. When the debit spread moves into ITM roll it to ATM or OTM again

Good night

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