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I added about 1/3 of my monthly size during the dip this week. It wasn't much of a dip, but that may be all we get if the market is back into the go-go mode of the fall. I have short may put spreads at 752 and 745 and will be happy to add more if we drop in the next couple of weeks. I also...

I trade mostly ER2 options, so while I wasn't burned by SET exactly, I was still highly discomfited by the 10 point gap up. I had short calls at 835, a smaller number of longs at 830, and other longs at 850 which are irrelevant this close to expiry. So when the market gapped open to 830 and...

Someone asked a couple of days ago about the month to month SPX changes. Attached is a spreadsheet w/data going back to 1986. Thanks go to rdemyan who I think was the one who originally posted it here.

The best way to guess at what could happen during a 2001-2002 environment is to go look at the records of cta's who were trading credit spreads during that time frame. There are a number you can look at, and you will find some interesting results. Keep in mind that survivorship bias plays a...

Ok, going back and reading his initial post, its obvious why people might be irritated. The quote below is pretty cheeky. I can hear the Nelson "Ha Ha" coming through loud and clear. Thinly disguised schadenfreude.

This argument gets made alot against system vendors, and it makes sense. But for a service like the one zegras is pimping, it doesn't apply as much. The Crowder guy isn't selling a super-secret-scalp-for-millions system. He's just a guy charging a relatively small fee for some general...

Its swift and sudden. So its a black signet at least. We'll see what happens when it grows up in the next few days. Found this image. Just make sure you're not the girl in the water :) She looks peaceful, but that may just be because she's dead LOL

I generally buy calls around the same time I am selling puts (and vice versa). Once the market settles down a bit, I will definitely be looking for some cheap call spreads, or perhaps just long calls depending on price. I see it more as cheap insurance than as a for-profit trade. You do...

IB choked on me once today already. Not that I am very motivated to trade anyway. Bid/ask spreads on the ER2 options have expanded from the normal 0.50 range to 2 full points. No thanks. The fear (and premiums) will still be there in a day or two when we have a better picture of what might...

Nice work MT. Give yourself some credit for a well handled trade. You put on a bull put spread near the high, and you closed it for a profit after a 50 point sell off. The mouse ears and a little bit of intraday timing served you very nicely. Much more important than the profit, you...

Probably not a good day to sell put spreads. With a drop this steep, VIX will stay high for a few days. For the past 9 months, you had to jump in and sell puts fast on any little drop. This drop is entirely different. There will be plenty of chances to sell after the market bottoms for a...

Bingo. Anyone who has done even the first bit of homework on otm credit spreads knows that its a bog-simple strategy with a great w/l rate. Perfect for recommending to a bunch of followers because you're always a winner. And who doesn't love a winner?!? :) How much money you actually get to...

Those frontmonth small delta OTM calls really don't help very much to hedge short calls closer to the money. The width of the bid/ask spread is so large, it dwarfs the option deltas for a "normal" move up. If the market goes apesh1t and shoots up to 1470, then of course the 4 1470s will be...

As coach said, they are settled with futures. But the futures and options are traded on Globex, so they are quite liquid. There is no reason to ever find yourself "stuck" with being assigned. If you are trading an option at the bid or ask, fills are instant. You have an IB account if I...

I think Mark's answer contains the real answer for you on closing your trades early. You are using a method to determine when you think the market is overbought or oversold. Those conditions are when you look to enter a trade. Why are you not using the exact same conditions to exit your...

"SPX for FEB expiry 1sig = about 35points at current volty." Ay, there's the rub :) Mechtrade's very interesting chart is a perfect visual for this. If you were using the bands to place shorts for May or June, you had to be aware of what can happen when vol picks up.

They do have futures, but they do not have options on futures. Last I heard from them, they were trying to get it done in the first half of 2007. No telling how the merger has impacted those plans.

Probability of Profit

Yes and no on the fop expiration. There is no jury-rigged SET value to bite you in the ass. However, the futures options expire on Friday, not Thursday. So if you are holding to expiry, you will have the options until the end of RTH on Friday. The options are settled with futures...

Option prices are similar between the futures options and index options. If there was a real price advantage to one or the other, it would quickly be arbed away. You will see different prices in the scenario you asked about below. ES is the SP500 emini futures contract. The futures...