If you trade options, you’ve probably heard that tweaking a losing position can turn things around. In reality, the safest move is often to do nothing.
Why Adjustments Aren’t Always the Answer
Many traders jump into adjustments because the market feels uncomfortable. An adjustment should either lower risk or raise profit potential. If it does neither, it’s just a reaction, not a strategy.
Six Situations to Skip Adjusting
1. Strong Trend Market
When the market is moving sharply in one direction, neutral option strategies stop working. Rolling strikes or adding legs hoping for a reversal usually adds cost and stress. Accept the planned loss and exit.
2. Price Has Crossed Breakeven Significantly
If the loss has already reached about 35‑45% of the maximum risk, the trade structure is broken. Continuing to adjust often becomes damage control. Exiting is the professional choice.
3. Near Expiry (Last Two Days)
In the final 48 hours, option prices react sharply to small moves. There isn’t enough time for a recovery through time decay, so adjustments often backfire. Closing the position is safer.
4. Event‑Driven Days
Budget announcements, RBI policy meetings, inflation releases, or global events can spike volatility unexpectedly. Adjusting before such events is based on guesses, not probabilities. Staying light or staying out is smarter.
5. Adjustment Increases Position Size
Adding more contracts to lower the average loss is not an adjustment—it’s escalation. Many accounts are ruined by increasing exposure when the trade is already stressful. Avoid any change that needs more margin.
6. When Emotions Run High
Fear, frustration, or the urge to chase losses can drive poor decisions. Adjustments should be rule‑based, not emotion‑based. If you’re feeling charged, stepping away is the best adjustment.
Bottom Line
Adjusting options is meant to improve the odds when market conditions allow it. Knowing when NOT to adjust keeps losses small, confidence high, and trading sustainable. In derivatives trading, sometimes survival is the real success.