Exiting option spreads early….not for me

Got the following question via email from a friend:

Ok so let’s say I have a vertical bull put spread at 135/130, on $AAPL for example, and the current price is hovering around 136. I then notice that it starts to take a dive, from your experience does it make more sense to buy the 135 put you sold or wait? Seems like the max loss of $500 (minus the premium) can be avoided by buying the 135 put for $200, for example. What’s your take on that strategy? Obviously this nets a loss overall, but mitigates the max $500 loss. Ideas?

My response:

One of the reasons I trade spreads is to take that sort of thinking/reacting out of the equation.  Basically, the odds are extremely good (probably around 60-75%) that you’ll get a “scare”, where the stock moves towards or hits your short strike….but only a 30-38% chance of it holding below that level all the way through expiration, as explained in a section of this post on why I will not use stops:

To me, if you’re going to trade with “stops” or react to price movements, it’s best to simply trade the underlying directionally so that you maximize liquidity and minimize commissions.  With spreads, you’ve got to make money if you’re right in your original thought (AAPL will be over 135 at expiration)….and taking yourself out of that opportunity to avoid the other portion of the potential loss gets very expensive and usually very frustrating.

p.s. I will often exit spreads in the first couple of days of expiration week, especially if I can get out of my short strike for a nickel and let the other side freeroll in case of a huge unexpected market move, which has been known to happen.