Based on Friday's closing numbers, we could conceivably buy back the 620 puts and sell the 610 puts for about $3.60. On a typical 10 contract position, that would cost $3,600. We took in $1.10 or $1,100 in premium. That means a trader with a 10 contract position would be facing a loss of about $2,500. For me, that is acceptable.
There are five full weeks remaining until May expiration. It doesn't make sense to sit on pins and needles for the next for the next five weeks with an index thats trading so close to our short strike price (620). Our probability of success is about 50%.
If we close out the position now, we still have five weeks to possibly put on a new position (not necessarily on MID) to make a portion of our loss back. Once we put on a new position, the percentage of success on the new position is back to a more desirable 80+% rather than the 50% that exists now.
Early this morning the S&P futures were down over $5. As I write this, the futures have rebounded are now up over $2. We may get a slightly positive open. I know that, no sooner do I post this, but the futures will turn around. The point I want to make is that just because the market may bounce, it doesn't mean it will hold the gains.
You can decide for yourself on whether you want to close out your MID play. I'm going to look for an opportunity this morning to close the bull put spread position. I'm going to try to improve upon the $3.60 figure IF the futures continue positive and the market opens up.
Last month was great. However, we may have a rather trying month ahead of us. Keep your cool. Don't be afraid to get out of a position and accept a loss. It's just a cost of doing business. And, if the market rebounds down the road and MID closes within our original profit range, don't beat yourself up about closing the position earlier. It's the prudent thing to do. It's good business. And that's how we have to look at our trading -- as a business.
Good luck and trade smart.