Hello everyone. This is my first post and I apologize in advance if this question has been answered many many times before.
Everything I read on credit spreads claims your max loss is the difference between the strike prices less the credit received. Okay, so far so good.
My question is this: What if the underlying only breaches my short strike? (assuming I hold through expiration) I do not have the money to cover if assigned unless my long strike is auto exercised but I don't see that happening unless the long strike is breached as well.
I have a bear call spread (25 contracts) in place on RUT 920/925 with expiration in a few short days.
I've already rolled this position up once for a loss and will be ahead if I can get max credit but I might not risk sitting and waiting if it's possible that I will receive a bill for 2.3 million dollars that I can't cover.
Thanks in advance!!!
Everything I read on credit spreads claims your max loss is the difference between the strike prices less the credit received. Okay, so far so good.
My question is this: What if the underlying only breaches my short strike? (assuming I hold through expiration) I do not have the money to cover if assigned unless my long strike is auto exercised but I don't see that happening unless the long strike is breached as well.
I have a bear call spread (25 contracts) in place on RUT 920/925 with expiration in a few short days.
I've already rolled this position up once for a loss and will be ahead if I can get max credit but I might not risk sitting and waiting if it's possible that I will receive a bill for 2.3 million dollars that I can't cover.
Thanks in advance!!!
