I did an adjustment last night against SPY & WYNN as SPY breaks above 195 decisively and rallies all the way to form a long white candlestick.

I have chosen the most aggressive strategy, which is to close my sell leg and let my buy leg runs. I will include some screenshots (#1, #2)later.

The drawback of this strategy is that if the market u-turn and drops, I may get double whammy and lose more than my define max lose earlier. This method is not suitable for conservative trader. A more conservative trader should consider to convert this credit spread into a bull call debit spread and create another bull put credit spread to capture more premium. For beginner, you may get confuse by now. Don’t get carry away with this bombastic jargon. I will cover this repair method with pictoral diagram in the next post and it should be easier to understand.

As for XLE, the position is not yet threatening. I will continue to monitor and I may repair it base on the conservative method that I just mentioned.

Finally, you should be able to see the important of portfolio management now. I initiated few bear call spreads in feb and I did mention in the post earlier that if you have too many bearish positions, you should be careful of the upside risk. Vice versa if you have too many bullish positions, you should take care of the downside risk. I am more comfortable to have a neutral/slighly bearish position but after the market rallied and repaired done yesterday, my position is slightly skew towards short term bullish at the moment.

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