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Options Strategy Adjustments

The document provides a guide on options strategy adjustments and rolling techniques to manage existing positions effectively. It outlines the definitions of adjustment and rolling, a general framework for making adjustments based on market conditions, and specific examples for various strategies like Iron Condor, Credit Spread, and Straddle. The guide emphasizes maintaining a calm mindset and focusing on adjustments that add premium or reduce risk.

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22 views

Options Strategy Adjustments

The document provides a guide on options strategy adjustments and rolling techniques to manage existing positions effectively. It outlines the definitions of adjustment and rolling, a general framework for making adjustments based on market conditions, and specific examples for various strategies like Iron Condor, Credit Spread, and Straddle. The guide emphasizes maintaining a calm mindset and focusing on adjustments that add premium or reduce risk.

Uploaded by

brthummaonline
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Options Strategy Adjustment Guide (Simplified for BT)

1. What is Adjustment and Rolling?

Adjustment

Adjustment means modifying your existing options position to: - Reduce potential loss - Lock in partial
profits - Re-center your position to match market direction

Rolling

"Rolling" is a specific type of adjustment where you: - Close an existing leg (or full spread) - Open a new
leg at a different strike or expiry

Types of Rolls: - Roll Up / Roll Down: Move strikes higher or lower - Roll Forward: Shift to a future expiry -
Roll Inward: Narrow the spread - Roll Outward: Widen the spread (to collect more premium)

2. General Adjustment Framework (For Any Strategy)

Step 1: Define Risk Zone

• Identify breakeven points


• Know maximum profit/loss

Step 2: Watch Market Movement

• Has price moved too close to one of the short strikes?


• Has volatility changed significantly?

Step 3: Identify Pressure Side

• Is it the Call side or Put side under pressure?


• Use Delta and P/L to assess

Step 4: Adjust Accordingly

Market Scenario Adjustment Action

Trending Up Roll PUT side up or CALL side wider

Trending Down Roll CALL side down or PUT side wider

High Volatility Roll spreads wider or convert into debit spreads

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Market Scenario Adjustment Action

Profitable early Book profits early, exit position

Tip: Prefer adjustments that add premium or reduce overall risk.

3. Strategy-Specific Examples

A. Iron Condor

Setup: Sell 24600 PE & 25000 CE, Buy 24400 PE & 25200 CE - If Nifty moves to 25250: Roll PUTs up (e.g., Sell
25000 PE, Buy 24800 PE) - If Nifty moves to 24400: Roll CALLs down (e.g., Sell 24600 CE, Buy 24800 CE)

Why? Collect additional premium to offset losses.

B. Credit Spread (e.g., Bull Put Spread)

Setup: Sell 25000 PE, Buy 24800 PE - If Nifty falls below 25000: Roll down both legs to 24600/24400 PE -
Alternative: Convert to Iron Condor by adding a Call spread

C. Debit Spread (e.g., Bull Call Spread)

Setup: Buy 24600 CE, Sell 24800 CE - If Nifty stagnates or drops: - Roll spread to next expiry - Widen
spread (e.g., Sell 25000 CE instead of 24800 CE)

Goal: Give more room for profit if market eventually moves up.

D. Straddle / Strangle

Setup (Straddle): Sell ATM CE & PE (e.g., Sell 24800 CE & PE) - If market moves sharply: Roll the losing side
closer to market or convert into Iron Fly or Condor

Setup (Strangle): Sell OTM CE & PE (e.g., Sell 25200 CE & 24400 PE) - If price moves near one strike: Roll
opposite side closer to regain premium balance

E. Butterfly Spread

Setup: Buy 24600 CE, Sell 24800 CE (x2), Buy 25000 CE - If price moves away from center (24800): - Roll
entire butterfly closer to current price - OR widen wings to create an Iron Condor

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📈 Adjustment Mindset Checklist

• Stay calm and assess before reacting


• Adjust for credit or reduced risk
• Don’t over-adjust if within breakeven zone
• Be mechanical, not emotional

This guide is your simple, go-to reference for managing any options strategy using adjustments and rolling
techniques.

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