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Thanks all for answering the NDX question. I was asking because I'd like to put on some debit put spreads when the SOX starts to roll over and the NDX starts to form a top. I think SPX is better for credit spreads and NDX is better for directional (debit) spreads.

Does anyone here do spreads on the NDX?

...one more that Schwager mentioned repeatedly: the best traders patiently wait for a high-odds trade to really step on the gas. This is probably slightly at odds with many of the iron condor strategies that promise some sort of "monthly income" approach...

I like to re-read Market Wizards I and II from time to time, and thought I'd post the top 5 takeaways in case anyone might benefit from a refresher: 1) Don't trade without a trading plan. 2) Cut your losses, let your profits run. Managing risk is critical (and you can't manage risk...

With VIX this low, I'm not doing any credit spreads -- just not a good deal -- instead buying calls/puts or debit spread.

You're selling premium with VIX at 10? Wow :eek:

So many top callers out there.... signs seem to be falling in place, but man, am I skeptical:cool: I don't think the market will ever go down again.:D

Rally... everyone's got a price... Mav doesn't have to hand over his knowledge for free...

Well, Mav, I gotta say I can't disagree with anything you've said here... thanks for answering. I am curious, what does it take (account at your firm, account size?) to have you share your 11 years of development (the win-win being that your firm shares the success of the person you share...

Maybe I've got it wrong but it seems you're being quite cagey about your trading. On the one hand, you like to demonstrate your knowledge of derivatives on this board. On the other hand, you're holding back when it comes to explaining how YOU make money applying your knowledge. You gotta respect...

Hey careful there buddy... the hype meter is edging into red a la George Fontanils and his cronies who claim they have discovered brilliant new trading techniques... I doubt you're doing anything different than your averag floor trader. I generally have a hard time with people who do something...

Cache -- thanks much. What is PoP? Also, I've looked at selling slightly ITM credit spreads as well, depending on how strong my directional conviction is (yes, moot point, credit-debit spread equivalency...). What underlying do you put flies on? Are they ATM flies?

RM -- I'm thinking along these lines too: - 20% of total capital at risk at any time - r/r no worse than 3:1 (risk 3 to make 1) - drawdown should not exceed 10% of total port I'm looking at CTM spreads/condors that I an leg into... or flies that I can leg into and adjust as the market...

Exactly right. Your broker makes money on your winning and losing trades. Your mutual fund takes fees whether it goes up or down, etc. etc.

Wrong. Both debit and credit spreads have negative expectancy.

Oh no... not this comment again.... Maverick are you there? Google "equivalent debit credit spread" and also "expectancy". With a credit spread, the bank loans you the moola up front... they're the same.

This statement is true but somewhat subjective... is there a mathematical way to determine whether the credit on the OTM spread is enough to reward you for the risk taken?

Well, yeeeeeeeesh! OK, since that's out of the way.... Coach's gamma curve plot coupled with your comment "when you're ATM, gamma has nowhere to go but DOWN - this is a good thing from an exposure point of view." says it all. I think ATM spreads (or ATM flies) hae their clear advantage...

That's a really good one.... I laughed a lot when I read it. Cool.

Rally -- please explain what you mean by cheap gamma?