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I'm not Cache obviously but something to think about with your diagonal: Large slippage,b/a spread in ITM Leap is likely. If you run the numbers, probably not much better return than risk free and that is IF you're right on direction. Would be interested to see some examples of what you're...

Yes, the long butterfly is short vega, short gamma and long theta. It wants the underlying to sit still and gains value as time passes if in profit zone. It can be dissected as a short straddle with wings. The short butterfly is long vega, long gamma and short theta. It wants the...

The most popular beginners book on options is "Options as Strategic Investment" by McMillan. Haven't read it myself but have read his other book "McMillan on Options" which is quite readable and covers various strategies. However, if you want to ramp-up your fundamental understanding, as...

Yeah, always room for confusion (and disagreement) on the terminology for this one: (Ex.) MMs in my experience, tend to refer to long butterflies as being long the wings and short the body. Some retail traders tend to refer to long butterflies as butterflies that incur an initial debit for...

Ok, so you're legging into a Bear PUT vertical. You went naked short first...presumably that's why the Reg-T margining is a concern for you. Is your retracement prediction for NDX based on TA, fundamentals or something else? I hear what you're saying about consolidating positions, what...

Hi Iceman, Nice journal. Keep it up. Great reading. Quick question: what is your reasoning/analysis for going long MNX PUTS? In addition, what delta/gamma/IV criteria did you use for selecting the 180 series? Any reason for using MNX over NDX on this trade? MoMoney.

True, if you had been long the stock probably would have been more profitable...but hindsight is 20/20 and long stock has unlimited downside risk (to zero anyway) whereas these spreads do not so that's a small consolation. RE: Stop Loss What I meant was, if the underlying moves against...

Skanan, Hello there. Did you consider rolling up your existing GOOG vertical to lock in the profits and build expectancy rather than opening a separate vertical? What is the worst risk/reward ratio you will accept for credit spreads? Your last PUT spread was chosen based on perceived...

Skanan, Do you have a limit for how far out you will go short gamma? I personally, don't go further out than 40 days but preferably less - as little time to be wrong as possible. MoMoney.

LOL Indeed, any strategy with more than one leg is a spread. True, this thread has long since ceased to be a journal of Phil's credit spreads on the SPX, rightly or wrongly. However, you may have a wider audience for feedback and insight on RO if posted as a new thread. No complaints here...

The $20 per month for the advisory equates to $240 per year which on a $10,000 account (the maximum allowed) is 2.4% - Gatorplease was viewing this as a management fee. All a little OT! Perhaps a new thread for discussing Red Option? MoMoney.

Gatorplease, OK. You're ahead of me. You've had experience with them before, I have not. Furthermore, I have no experience of any other advisory either so I have nothing to compare. I won't be manually trading the strategies or won't want to auto-trade at a later date either so the fills...

Gatorplease, I signed up for the mini-basket advisory but will not be auto-trading it. I'm looking at it purely from an educational point of view and I believe that is it's main purpose: "This new advisory is for people who want to learn how professional traders manage overlapping and...

Okay I lied, one last post: Not quite: 100 SPX Spreads for $4000 (ROM: 4%) 1000 XSP Spreads for $5000 (ROM: 5%) Figure 1$ per contract commissions: One Way: 100 SPX Spreads for $3800 (ROM: 3.8%) 1000 XSP Spreads for $3000 (ROM: 3%) Round-trip (for closing/adjusting) 100...

Last post for the year on this thread from me :) As solicited by Phil, Lessons learned 2005 (and continuously re-learning): Under all circumstances, at all costs, with all powers at one's disposal, IGNORE any and every form of market commentary and forecasts that comes your way. This...

For those that are interested on the debate between whether options are priced in terms of trading days vs. interest rates accruing in terms of calendar days etc. and the "weekend effect" in general for theta, I was hunting around for where I first came across the concept, but couldn't find it...

If you think you've found a difference between the SPX and XSP, there be arbitrage in them thar strikes...shhh don't tell anyone. Buy the cheaper one and sell the more expensive one. Interestingly, there does seem to be a difference which I thought would have disappeared by now but...

LMAO. No more beating from me :D

Lol. I seem to have reached the limit of my explanatory powers here. ANY strategy will work often under the right circumstances. Unfortunately, I don't know another way to explain this. There is no set of rules saying one strategy is intended for one purpose e.g. hedging and another...

Ludmil, Rooting out bad strategies is a sensible idea. However, I'm not convinced there is neccessarily such a thing as a bad strategy, certainly as far as the strategies we're discussing are concerned. I'm more inclined to admit that there is room for mis-using/mis-managing/mis-understanding...