Help with basic Verticals

Hi Guys !
I was hoping that someone could help me with some basic stuff.

- Is there a "less complicated" way to figure out when a vertical call/put is at the max profit, and I should be closing it out. If you see attached SPX, I don't know what my Max profit for this trade should have been and whether to close it out or not

- In the same trade, what happens if I was to just sell (? not sure if possible, It was a vertical order) the MAY 14 1830 PUT and try and get some extra money since it expires Tomorrow


- How come for SPX, the days to expire says "0" where AMZN says "1"

I know some (if not all :p) of my questions might seem dumb, but I am trying to learn the basics. The tasytrade videos are awesome but cant possibly cover every little details :(

Thanks a Million !!!
~ Emm

I'm not a financial adviser but if these were my positions I would consider the following.

I wouldn't be taking on so much risk in one product if I was still new at this. Means I would spread the risk around different underlyings.

I don't know how much credit you received on these but with volatility so low there is a lot less premium to collect vs how much you can lose. Means your return on risk is lower when selling premium on low volatility underlyings. But anyway....

The amount of credit you received is your max profit. To see the value you can just do the math on the two values of each option in the spread....or you left click, drag and highlight each spread and right click on the little dot next to "100" if each leg is highlights then you can select "create closing order" and you can see how much it would cost to close it.

Example...if you received 1.50 in credit and it costs 3.50 to buy them back to close then you will be losing 2.00 per option.
If you recieved 2.40 in credit and is cost .40 to close then you made 2.00 per option.

If you let them expire it will cost around 15.00 per spread in fees to clear them. If you signed up through dough.com you can close each one ahead of time for 1.50 per lot. If not it will be 9.99 + 1.50 per lot.

If you did not sign up through dough.com then set up a dough.com account and contact your LOCAL broker representative and tell them you are using dough and tastytrade and need that fee reduced. (may take a day or two to go through).

If these were my positions I would watch the /ES before market opens and plan on getting out at open if it looks weak or hanging in until afternoon if it looks strong. Could go either way...but if SPX continues dropping tomorrow you will have more losses.

Example---- your 1835/1830 position looks like it would have cost 1.40 to close at end of today's prices. Those may change at opening. so If you received 1.00 in credit when you sold them you could have bought them back at around 1.40 to close the position....means a loss of .40 per option. If you sold them for 2.00 then you would have a gain of .60. Make sense?

If the spread is 5$ wide (like 1835/1830) then the money you are playing for is the 5$....your credit plus max loss will always equal the width of the spread (here = 5$)...or 5$ minus your credit equals your risk (potential loss).

If you just sell the may 1835 put you will be short a 1 lot of SPX....means a naked put...probably not where you want to be...even if your account is big enough to handle it. When you buy or sell a spread treat them as one order. If you want to sell naked out of the money puts then do that separately. You will need a lot of capital to back up a naked put in the SPX but if you've got it it's a good bet. But you can take the same bet with the SPY with much less capital.

One says 0 and the other says 1 just because they are counting the days to expiration differently...you have until market close on fri with either one.

Is this a paper account of for real money?

Oh....and never ever let them expire if it looks like the price will land between the two strikes of the vertical spread at close on expiration friday.....ever.....get out before it expires...always. The world won't end but you will wake up on sat or sun with a huge equity position that you may not want.....kinda scary.

You may need to check me on the SPX expiration. I don't trade that one and it may have settlement on Fri. (later today) So the trading may have ended on Thurs then they will be cash settled on Fri. and expire on Sat.
http://www.cboe.com/products/indexopts/spx_spec.aspx

All the information I gave you was as I understand regular equity options. I haven't traded SPX so really not sure how it all translates as far as tick values etc.

You might want to get a better handle on this stuff before committing so much. This can be hard enough without making dumb mistakes.

But I like where your headed. Selling out of the money spreads far enough that you have a very high probability of profit is a good idea but when you get out too far you have to watch if the premium you are collecting is worth the capital you are tying up. Anyway...good job.