Credit spread 1:1

[destriero]

Yes and in the original post I said what's the point of selling a call vertical spread ITM to get to 1:1 when you could just buy a put debit spread instead and carry a better risk reward...but it turns out the call credit spread will out perform the put debit spread.

You don't get it and I don't care enough to explain that image. You said spreads with different strike performed differently... well, no shit.

 

[destriero]

Yes and in the original post I said what's the point of selling a call vertical spread ITM to get to 1:1 when you could just buy a put debit spread instead and carry a better risk reward...but it turns out the call credit spread will out perform the put debit spread.

bc ur stupid.

Why buy a deep itm call spread at a 99D when you can buy a 1D put spread?

 

[TheDawn]

Yeah but all volatility is implied when it comes to options pricing.

Yes that's the tricky part of options trading. Everything is priced according to implied volatility but your profitability is determined by real volatility and how different it is from implied volatility.

 

[taowave]

A wise man would sell a 2 pt box at 2.73

I just created a box with a $2 spread at a cost of $273.50
The spread is only $200 so I'm down 73.50 before we even consider fees.

Show me a current example of a box spread that locks in a profit.

 

[wxytrader]

So these are the variations of a box spread?

Anyway the topic here is about how a credit spread will outperform a debit spread for the same directional bias.

 

[taowave]

Surely you jest .....

How many hours have you been at this??

I'm talking trading

So these are the variations of a box spread?

View attachment 328628

Anyway the topic here is about how a credit spread will outperform a debit spread for the same directional bias.[m.m .mp/QUOTE]

 

[destriero]

Yes and in the original post I said what's the point of selling a call vertical spread ITM to get to 1:1 when you could just buy a put debit spread instead and carry a better risk reward...but it turns out the call credit spread will out perform the put debit spread.

bc the vol surface isn’t flat. Same strike ps and cs are governed by the box arb. An atm cs is the revenue side of the fly on index, provided you are accounting for the forward (atm basis for both). Why? bc upside strikes are -skew on index.

 

[destriero]

Take an equidistant otm cs and ps on index, but within say 30-delta. Equidistant priced against the synthetic at the expiration in question. On index the cs will trade at a larger figure than the ps. The box arb reflects the synthetic of EITHER spread, not the relationship between an otm cs and ps.

in singles; puts are the revenue side.

in verts; cs are the revenue side.

it is NOT governed by any arbitrage constraints (ostensibly would be arbed away). It’s the origin of the term “risk” reversal.

an atm synthetic long or short is the forward. Long c, short put at x. Long the synthetic and short spot = reversal. Separate strikes and you add risk, and skew, thus a “risk” reversal. Skew cannot be arbed away hence the skew/convex vol-surface (smile).

 

[wxytrader]

Surely you jest .....

How many hours have you been at this??

I'm talking trading

How many Lambos do you have again?

 

[wxytrader]

bc the vol surface isn’t flat. Same strike ps and cs are governed by the box arb. An atm cs is the revenue side of the fly on index, provided you are accounting for the forward (atm basis for both). Why? bc upside strikes are -skew on index.

I'm accounting for either direction where the short call vertical (index) will result in better gains and less losses.