Vertical spreads
How do I adjust a breached Bull Put Spread to mitigate total loss potential?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Adjusting a breached bull put spread may involve rolling both legs down and out for a credit, converting to an iron condor by adding a call spread, or closing the position outright, each trading off additional risk and complexity against the chance of recovering the trade.
How it works
These adjustments extend time and often capital at risk in hopes the stock recovers, but they do not guarantee improved outcomes and can sometimes increase the eventual loss if the stock continues declining.
An example
A trader whose $45/$40 put spread is breached by a drop to $38 might roll it to a $40/$35 spread expiring later for a net credit, lowering the breakeven point.
Risk & limitations
Cboe materials note adjustments add complexity and transaction costs without eliminating the underlying directional risk of the original trade.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.