Adjusting Credit Spreads / Rolling forward for a credit / Virgin Galactic stock (SPCE)

Updated: 11 May, 2021 seen 103

At the end of April, 2021 I decided to start my YouTube channel and talk about my options trades, stock investments and finance in general. 

Here is the first video I made about adjusting credit spreads, rolling strike prices e.t.c. If you enjoy the content, please subscribe to my YouTube channel


Good morning everyone! Reinis here. I'm your guide doing covered calls investing with credit spreads and so on. 

So today I'm going to talk very briefly about rolling a credit spread. 

A couple of weeks ago I bought a credit spread on Virgin Galactic stock. The stock was trading around $30 per share and I thought it would be quite easy money if I would sell  26 / 24 credit spread.

For this spread, I got some $35 dollars. 

Today Virgin Galactic is trading quite well below $23,  it's about $22...oh no no no it's $23.40 today,  but still, we are deep in the money and the expiry is very close this Friday, April 30. and uh what should I do.

So basically there are two things I generally do.

First, I could close this position with a loss.

With the current price, it would be a loss of about $130. This is fine, but in general, I don't like losing money in the stock market and instead of closing with a loss, I'm still looking on rolling forward this position.

This basically means that rolling forward is you're buying back your current positions and you're selling new ones in the future, preferably for credit.

If my strike now is 26/ 24 I could roll this credit spread to the future. I would look for some 25 / 23 but I'm not sure. I will look!  But in general, I will try to lower the strike price so i get the better price. If I will be ready in the future to take this assignment and let's say the stock price hovers around those 23 dollars in the future and my current price is 26 but I lower this to 25 then it's all ready for one dollar better price I have now.

But let's hope that the SPCE... let's hope that the Virgin Galactic stock is going to kaboom explode yeah you got me all right that was my brief [Music] news