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Only spreads - verticals and diagonals. Mark

Nope. In '87 it was worse. Had tons of naked puts. Not a happy outcome. In '78 and '84 I was short a boatload of calls. Today, as a public customer, I am MUCH more risk adverse. Mark

Im general, I don't hedge against the losing position. What I hope to be able to do is sell put spreads on the next decline. My goal is to have half my position in call spreads and half in puts. (I never have a market bias.) Today, due to recent rallies, I am slightly off balance, and am...

Yes. But, I much PREFER to open a new position with higher strikes. Let's say I my minimum requirement is to collect a credit of 2% of the margin (50 cents for a spread with strikes 25 points apart) and I sell a 50-point SPX diagonal spread for a credit of $1.00. If the market rallies...

If under-invested, I sell every 50-60 DOW points. If not, then every 100 points. I sell the same spread again when I like the new credit that is available. But, I prefer to move up one strike and open a new position that is further OTM as long as I can to achieve my minimum potential return...

I sell call spreads on rallies - regardless of how bullish I am or how high I think the market is going. After 30 years in this business (most as a CBOE market maker), one thing I know for sure is that my predictions concerning market direction are worthless. Thus, I just keep scaling by...

I find that having NO OPINION works well for me. I sell call spreads on rallies and put spreads on dips. Because I sell all spreads for a credit, it's painless to pay out some of that cash to cover one of the spreads, if and when the strike is threatened. Mark

That's a huge loss (sorry to hear that it was so painful) for a spread that did not even go thru the strike. My guess is that you sold way too many spreads for the size of your account. Mark

Depends 100% on strikes chosen. If underlying index approaches your short strike a few days before expiration, diagonal is going to be a huge winner, regardless of implied vols. OTOH, the call credit spread is going to make you sweat bullets. Mark

Not true when you limit yourself to doing spreads for a cash credit. But, even small debit spreads don't lose - unless the market move is huge. The risk in these spreads is a market move that sends your shorts ITM. Mark

When initiating diagonal spreads, if you buy exta options, you have a posiiton that is closer to delta neutral. That method yieds excellent results when the market moves and the options you sold go in the money. By NOT buying the extra options, you do much better when the option you sold...

Hi Arizona, Yes, it's nice to play with the grownups. I'm referring to diagonal credit spreads. Mark

Hi AZ, Every invetor has his own answers, but 1) I prefer 6-7 weeks out, but also do them for less time, if other criteria are satisfied 2) I worry, but do nothing 3) I go as far OTM as possible, as long a I can rceived my minimum credit (see below) 4) I'm consevative. I settle...

Most of the abbreviations used are symbols for stocks or indexes. Examples: RUT, MID, RUI. Those are not abbreviations; they are symbols for the Russell 2000 Small Cap index, the S&P mid-cap 400 index, and the Russell 1000 Index respectively. Mark

I agree. Thanks. Mark

Hi, I find RUT MMs reasonable. That means they (almost) always show a bid for my spreads that is 15 - 20 cents better than the natural b/a. About half the time, I get filled immediately if I offer 5 to 10 cents better than the mid-point. But - I find it more difficult to close diagonals...

Murray, Very interesting points. I carry many small positions each month (I sell spreads for cash credits only and I also sell more call spreads on every rally and sell more put spread on every dip - until I have invested all I care to invest for that time period). To date, I have been...

What if IV were so high that the corresponding call was $15 bid? Wouldn't the arbs be willing to pay a time premium for the put? Mark

I get an occasonal fill in SPX, but it's a very annoying process. Perhaps it's my diagonal spread orders that makes is so difficult. I received better fills when trading same month vertical spreads. These days I trade RUT, RUI and MID. I've tried XEO and SMA, looking for alternate indexes...

Any diagonal - put or call - can be put on for a credit. Obviously, the amount of credit (or debit) depends on the distance between the strikes. Mark