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<<I was wondering what Hamp said or what some of you use as risk control.>>

I'm pretty sure Hamp said that he holds credit spreads until expiration. He views losses as costs of doing business and his risk control is keeping the loss potential of each spread position limited to 2.5% of his trading capital.

Personally, I agree with Hamp unless something fundamental has changed that makes my initial view of the stock direction no longer probable. For example, if earnings come out worse than expected and I no longer think the stock will rise, I would close out my bull put spread.

The problem with setting stop losses at the point where the short strike goes in the money is that this happens quite often, even in cases where the stock closes out of the money at expiration. Setting such a stop loss will not permit the probabilities to play themselves out and you will get whipsawed often.

Rwanda
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