Re: a Bull Put or Bear call Vertical Credit Spread: How are stops calculated that apply to both sides?

ChaosNantuko answered 5 months ago …

You should be able to place a stop loss order for the net value of the position.
So if its a 30-35 bull put spread, and you entered for a credit of 2.50 (for arguments sake, the 30 put was bought for 8.00, the 35 put was sold for 10.50), you could have a stop set so that if you owe more then 3.50 on the entirety of the position, its automatically closed (eg: max of $1.00 loss per share). That stop might be triggered if the 30 put goes down to 3 and the 35 put goes down to 6.50, or it might be triggered if the 30 put went up to 10, and the 35 put went you to 13.50.
imo, its more convenient to trade debit spreads instead of credit spreads because all the critical numbers are the same (they're synthetic positions), but the whole process is significantly more intuitive.