🚨 I’ll be live at 9 a.m. ET🚨
 SPX broke 7,700 convincingly… more downside ahead? Plus major OpEx today, some big wins and more [tap to join us for the Daily Profit Plan]!
I want to walk you through a decision that illustrates one of the most critical skills in options trading — knowing when to take your profit and walk away, even when the math says you could make more.
I had a call ratio backspread on the Mini-SPX Index (XSP) that I opened for a $1.88 credit — selling the 769 call and buying two 775 calls. I collected premium upfront, and a strong rally through my long strikes offered unlimited upside potential.
But by Thursday morning, the market wasn’t cooperating. We opened lower by about 40 or 50 points, and the price action suggested we could remain choppy — making fresh lows, pulling back then repeating the pattern along a declining trend line.
I was also using 44.28 from the morning’s smart range as an analytical reference. Metrics like that help frame expected movement, but they aren’t guarantees. As price action develops, the position itself tells you whether the original thesis still deserves your capital.
The Dead Zone That Changed Everything
At expiration, the position’s loss zone ran from approximately 771 to 779, with the greatest risk near the 775 long strike. If XSP stayed below roughly 771 by Friday, I could keep a profit near $200. But if it recovered into the dead zone without rallying beyond the upper breakeven, I could face a maximum loss of about $400.
The structure had changed against me. This trade needed follow-through from the previous day’s Treasury bump, and we got none. The market rose, faded, rallied again then surrendered the move. Combined with the potential for lower lows and brief pullbacks, that told me momentum wasn’t supporting my upside structure.
Looking back, a put ratio backspread with unlimited downside profit potential would have been more profitable that morning. But hindsight is 20/20…
What matters is managing the position you actually have.
Taking the Smart Exit
When I saw that a profit might be available, I checked whether the pricing was accurate and whether I could close during global trading hours. Options trading often demands that kind of real-time decision-making.
Once the market offers a reasonable exit, waiting for perfect conditions can turn good risk management into unnecessary exposure.
I closed the position for a $1.33 debit, keeping 55 cents in profit — about $55 per contract. It wasn’t the maximum possible gain, but it eliminated the dead zone risk entirely.
In today’s market, discipline matters more than squeezing every dollar from a trade. Ratio spreads require active monitoring because their profit zones are directional.
When price action, momentum and analytical ranges stop supporting your structure, you need to recognize it and act.
The goal isn’t to make every trade perfect. It’s to prevent a small profit from becoming a meaningful loss.
I’ll see you in the markets.
Chris Pulver
Chris Pulver TradingÂ
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
- Telegram:https://t.me/+av20QmeKC5VjOTc5
- YouTube:https://www.youtube.com/@FinancialWars
- Twitter:https://x.com/realchrispulver
- Facebook: https://facebook.com/therealchrispulver
Important Note: No one from the ProsperityPub team or Chris Pulver Trading will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.Â
P.S. Here’s Something Shocking That the Media Will NEVER Talk About…
Thanks to liquidity levels, you can now track Wall Street’s undercover orders in real time…
And target daily returns every day the market’s open!
