Using stop losses with credit option spreads

Using a stop loss is definitely something I recommend when trading stocks or straight option plays but definitely not in a credit option spread.

Your loss with a credit option spread is capped it can not go any lower than the exact amount you risk. Which is why I like credit spreads. Your profit and your loss is calculated before the trade. It takes out a lot of the fear/greed emotion driving of a trade.

In fact here is a good example of a 35/32.50 DEC put credit spread trade that the Market Skeptic is holding on a particularly volatile stock, RIO, which shows this philosphy —> themarketskeptic.com/archive/2007/11/29/lesson-in-volatility-and-stop-losses.aspx Keep up the faith Market Skeptic because RIO is trading above $35 today!

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