Credit Spread Question

FullyArticulate · Mar 20, 2007

Quote from thegazelle:

If you trade SPY and you could face early exercise, especially with the dividends they pay.

A good point, although probably not too significant to someone selling OTM credit spreads. Your short calls would have to get pretty far in the money to be called away (which would be max loss for him).

The OP should also look at ES futures options. I've found getting fills at the midpoint is getting easier all the time. Simple verticals should fill pretty well.

yip1997 · Mar 20, 2007

Quote from FullyArticulate:

A good point, although probably not too significant to someone selling OTM credit spreads. Your short calls would have to get pretty far in the money to be called away (which would be max loss for him).

The OP should also look at ES futures options. I've found getting fills at the midpoint is getting easier all the time. Simple verticals should fill pretty well.

Do you mean you can better fill with ES option than that with SPX? Does ES option has a smaller bid ask spread?

thejoker67 · Mar 20, 2007

Quote from torontoman:

Are we saying that it is better to do credit spreads on the SPY instead of the SPX?

torontoman has a good question. With the worries of SET and liquidity, isn't SPY better to trade than SPX?

FullyArticulate · Mar 20, 2007

Quote from yip1997:

Do you mean you can better fill with ES option than that with SPX? Does ES option has a smaller bid ask spread?

The best way to answer your questions is to get quotes for all of them.

I find ES has a better bid/ask spread than SPX, but that may just be the strikes and expiration months I'm looking at.

More importantly, I've had much better luck getting a fill at the midpoint on ES than on SPX. But again, that may be biased by what series I'm trading.

domestic · Mar 21, 2007

Quote from yip1997:

Do you mean you can better fill with ES option than that with SPX? Does ES option has a smaller bid ask spread?

offtopic yip; when are you gonna switch to future options? you know the all about the margin advantage.

yip1997 · Mar 21, 2007

Quote from domestic:

offtopic yip; when are you gonna switch to future options? you know the all about the margin advantage.

Since we are going to have pm in April, the margin advantage will disappear soon.

Switching to future options means higher commission. I am not sure if I want to switch yet.

domestic · Mar 21, 2007

Quote from yip1997:

Since we are going to have pm in April, the margin advantage will disappear soon.

Switching to future options means higher commission. I am not sure if I want to switch yet.

if that pm really works as good as span; i would wait also. on the other hand; i will not believe it until i see it.

i would be interested in hearing opinions on how the future option group (cme-globex) can respond to pm.

One · Mar 21, 2007

Thanks for the follow up atozcom. Interesting that yip1997 wasn't able to get fills at the mid, but I'm sure if varies by market.

When you ask for a quote, or where an order will likely get filled, and TOS calls the Pit, how much size is quoted on each side?

Thanks again.

jj90 · Mar 21, 2007

Quote from FullyArticulate:

The OP should also look at ES futures options. I've found getting fills at the midpoint is getting easier all the time. Simple verticals should fill pretty well.

What type of verticals are you doing FA? I ask cause mine sure aren't getting filled at midpoint, I have to leg in to achieve mid-spread results.

atozcom · Mar 21, 2007

Quote from One:

Thanks for the follow up atozcom. Interesting that yip1997 wasn't able to get fills at the mid, but I'm sure if varies by market.

When you ask for a quote, or where an order will likely get filled, and TOS calls the Pit, how much size is quoted on each side?

Thanks again.

I ask for the quote for 10 contracts.