Brand new to options here. I take one step forward and three back.
Here’s my question. How do you calculate a good stop limit price for a put vertical if I’m trying to be conservative and mitigate any losses? I’ve tried and tried to understand it, even with watching online and don’t understand the rationale.
For instance, I have a put vertical for .40 and .38, so they do an opposite order for .04. I see that it’s a tenth of the .40…but why? How is the math done?
Sorry for the dumb question but I really need to learn this shit!