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03 - Considerations for Trading Defined Risk
The Trade Busters
The Risk Reward Ratio in the Greeks
For the same $10 spread, right, I pay 30 cents for the wing. So my net credit, let's call it 50 cents. But if I set the stop based on the credit of the short strike, right, if I still set it at 240, the problem is now that risk reward ratio has changed. You will get a two to one risk reward. But something else happens. Like he was saying, this spread, the behavior in the Greeks, it starts morphing and acting like a naked, naked contract,. Because the short is in play, but the longest so far out.
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