How do I manage my Options spreads in relation to loss limits?

Modified on Tue, 9 Jan at 10:03 AM

If the unrealized loss on one part of your spread exceeds either the daily loss limit or total maximum trailing drawdown, you will need to split up the orders and piece out of the trade to keep from failing. 


Ex:  In this situation, your daily loss limit is $500, and you are currently in a debit call spread. One side has an unrealized gain of $1,500 and the other side has an unrealized loss of $1,000. Closing the unrealized loss in one order will result in a $1,000 hit, thus tripping your daily loss limit. You will need to piece out your order in increments to keep from tripping your daily loss limit of $500.

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