hi guys,
wanna talk credit spreads.. call me a dunce for not using them yet, but I always just found the naked put or call to work.. minus my learning experience of over leveraging when I first started..
some of my questions using credit spreads are:
1. can you get an advantage to using cost basis ( from what I know no 1256 contract can use wash sale, so I assume talking ES going in and out all year.. ) as one side is a buy, and if all just dwindles, obviously you lost that whole chunk of money.. am I thinking correct that that "lost" money get applied to cost basis your next buy again, or am I thinking that all wrong? can you capture any of that lost money for the buy side next trade or tax time?
2. is the general consensus to hold it till close, since the commissions increase dramatically if closing it out?
3. what tips and tricks do you use when entering a credit spread?
4. what is the "standard" strike difference you look for, is it based on strikes distance or risk or premium you collect when deciding how short or long you set the strike width?
5. one of the biggest ones I have is, how does increase of volatility affect the play? does the buy side mitigate the sell side if vol increases dramatically? wondering if you can get into a situation of margin trouble if volatility spikes like say a couple months ago.
6. is there strategy to selling off the buy side if say you feel confident the "play is over" and say you are running a put credit spread, to me looking at credit spreads is all that money lost to the buy side ( and yes its for risk control ) but is there methods for trying to capture some of it back at all? my problem viewing this is if selling off the buy side it would jump the margin up like what 25x over.. ???
7. do you run credit spreads often or do you choose another play? I found I wouldn't like iron condors as I don't like call sides, their premium to me is too low without out adequate far out strike zones.
8. I don't understand if it goes against you how to exit the trade. I get it's strike zones minus premium collected, but what do you actually do in a bad play? do you buy back the sell side and then what with the buy side, can you explain the procedure of getting out of the bad trade.
9. wondering about tax implications of commissions. I asked about this in the tax section, but I know stocks get treated with cost basis, is there any way to reduce commissions load as I find it seems to be coming in around 13% of what Im just estimating which seems very high.. for example a 56,000 play would incur 7,000 in commissions.
10. Last, what's the best advice to tell someone going into a credit trade
obviously going to run some of these on Monday. but I have so many open plays that I wouldn't be able to tell how it's affecting margin or anything with my portfolio, so appreciate all links, advice, facts, stories, opinions, better plays.. anything to help, as I guess to me this is WAY better then running naked options, bearing you can get fill rates on the strikes you want
wanna talk credit spreads.. call me a dunce for not using them yet, but I always just found the naked put or call to work.. minus my learning experience of over leveraging when I first started..
some of my questions using credit spreads are:
1. can you get an advantage to using cost basis ( from what I know no 1256 contract can use wash sale, so I assume talking ES going in and out all year.. ) as one side is a buy, and if all just dwindles, obviously you lost that whole chunk of money.. am I thinking correct that that "lost" money get applied to cost basis your next buy again, or am I thinking that all wrong? can you capture any of that lost money for the buy side next trade or tax time?
2. is the general consensus to hold it till close, since the commissions increase dramatically if closing it out?
3. what tips and tricks do you use when entering a credit spread?
4. what is the "standard" strike difference you look for, is it based on strikes distance or risk or premium you collect when deciding how short or long you set the strike width?
5. one of the biggest ones I have is, how does increase of volatility affect the play? does the buy side mitigate the sell side if vol increases dramatically? wondering if you can get into a situation of margin trouble if volatility spikes like say a couple months ago.
6. is there strategy to selling off the buy side if say you feel confident the "play is over" and say you are running a put credit spread, to me looking at credit spreads is all that money lost to the buy side ( and yes its for risk control ) but is there methods for trying to capture some of it back at all? my problem viewing this is if selling off the buy side it would jump the margin up like what 25x over.. ???
7. do you run credit spreads often or do you choose another play? I found I wouldn't like iron condors as I don't like call sides, their premium to me is too low without out adequate far out strike zones.
8. I don't understand if it goes against you how to exit the trade. I get it's strike zones minus premium collected, but what do you actually do in a bad play? do you buy back the sell side and then what with the buy side, can you explain the procedure of getting out of the bad trade.
9. wondering about tax implications of commissions. I asked about this in the tax section, but I know stocks get treated with cost basis, is there any way to reduce commissions load as I find it seems to be coming in around 13% of what Im just estimating which seems very high.. for example a 56,000 play would incur 7,000 in commissions.
10. Last, what's the best advice to tell someone going into a credit trade
obviously going to run some of these on Monday. but I have so many open plays that I wouldn't be able to tell how it's affecting margin or anything with my portfolio, so appreciate all links, advice, facts, stories, opinions, better plays.. anything to help, as I guess to me this is WAY better then running naked options, bearing you can get fill rates on the strikes you want
