This afternoon I had a great email conversation with an AAPLTrader Premium Member about
how to calculate rolling a credit spread... This is very important for everyone to know
so I thought I would post it up!

"Hi Micah,
I have a question for you regarding that LVS trade we spoke about yesterday that expires tomorrow. LVS is at 53.43 and my breakeven is 54.06. I took in a .94 credit (when I sold the March 55/52.50 bull put spread). If I were to buy it back it would cost 1.56 and sold the April spread for credit of 1.39 the cost of the spread would be .17. Do you take the .94 credit - the .17 debit and have a possibility of making .77 or is a loss of .17?"

My email back

"Hi,
Thanks for the email. Yes, you are right. Here is another way for you to double check...

Always calculate a rolling trade as a new trade and break it down step by step to make sure!

Original trade = .94 cent credit
Close it down for = 1.56 debit
overall loss of .62 cents

reopen the trade

receive a 1.39 credit
subtract .62 cents (the loss from 1st trade) =
total cents available to profit .77 cents

Nice job"

I hope everyone got something from this, feel free to post your thoughts and comments below!

Trade On,
Micah