Credit Spreads
- Thread starter gooch
- Start date
Larry McMillan
Options as a Strategic Investment. (The Bible on options, but I am sure you will hear other opinions). Expensive. A text book, not a light read. But everything you need to know.
Problem may be that the good strategies are hard to execute. I have been placing orders (spreads...I will not leg into a position, but that's just me) through Spear Leads for a few months, and have not gotten any fills. But maybe if you have a better trading desk.....problem now is the spreads (bid/ask as opposed to spread positions), due to less volume. At least that's my take on it.
Good luck!
Peace,
rs7Cottle.
Natenberg.
Natenberg.
i am using www.poweropt.com smartsearch to find credit spreads. You can search the database on fa,ta and otm/itm. In fact there isn't much you cannot define the search for.
Try www.optionsXpress.com and www.mrstock.com. Both online brokers target option players as their customers. Their web sites have tons of useful info for option trading.
The problem with credit spreads is liquidity. The bid-ask spread will take away a large percentage of the profit. The market makers can really eat your lunch. Most of the time, you can replace a credit spread of put options by a naked put. For credit spread of call options, it is more difficult, since most brokers have strict requirements for uncovered call. I am able to execute DIA credit call spreads via optionsXpress's web-based trading system. However, it takes a long time to cancel them. Now I am mainly using their order-trigger-order feature to trade credit call spreads.
Thanks for the reply. I was hoping someone would also comment on www.poweropt.com and credit spread tools there.
I have been using OptionXpress and InteractiveBrokers for my credit spreads and am happy with both - given what they each do uniquely. I use a broker independant tool to price my spreads (www.trade-prospector.com) and their real time charts to time my entry and exits.
My trading has evolved to trading OEX, SPX and ES spreads with an occasional IBM or MSFT, depending on the ROI/Risk. Naturally, the last 3 years, I've been almost exclusively call spreads, but exited a nice put spread last week for a little "lunch" money.
I seem to be able to identify 1-2 trades per week.
I agree that the bid-ask spreads are huge and I frequently have to place an order where I think it will fill, be patient and hope somebody 'snags' it, mainly due to the floor broker games that get played. The IBM and MSFT spreads are nice when they are placed at ISE since you get immediate execution, but the premiums are just not there (unless you are willing to put "tons" of contracts out there). Just the nature of the game...
The "hole" in my strategy is that I miss "the best" trades elsewhere when I'm so focused on just the few I mentioned. I'm lacking a good "scanning" tool for credit spreads. Somehow, I must be missing a good feature of OptionsXpress "dragon" or something similar.
I'm starting to trade more ES futures options, wher the time value of money really helps the premium decay. I do trade a few naked, but mostly like the spreads (conservative by nature and with many scars where I let things ride a little too much).
Mave been very happy since I moved my IRA from "CyberTanker" in June after waiting some 2+ years for them to get options spreads, only then to find out they would not allow IRA's and after the lawyers got involved, the restrictions were just too great. Even on leaving them, they bounced my final check "on error" causing me $90 in bank NSF changes and 2 weeks delay in obtaining my nmoney. "Good Riddance"
.02
I have been using OptionXpress and InteractiveBrokers for my credit spreads and am happy with both - given what they each do uniquely. I use a broker independant tool to price my spreads (www.trade-prospector.com) and their real time charts to time my entry and exits.
My trading has evolved to trading OEX, SPX and ES spreads with an occasional IBM or MSFT, depending on the ROI/Risk. Naturally, the last 3 years, I've been almost exclusively call spreads, but exited a nice put spread last week for a little "lunch" money.
I seem to be able to identify 1-2 trades per week.
I agree that the bid-ask spreads are huge and I frequently have to place an order where I think it will fill, be patient and hope somebody 'snags' it, mainly due to the floor broker games that get played. The IBM and MSFT spreads are nice when they are placed at ISE since you get immediate execution, but the premiums are just not there (unless you are willing to put "tons" of contracts out there). Just the nature of the game...
The "hole" in my strategy is that I miss "the best" trades elsewhere when I'm so focused on just the few I mentioned. I'm lacking a good "scanning" tool for credit spreads. Somehow, I must be missing a good feature of OptionsXpress "dragon" or something similar.
I'm starting to trade more ES futures options, wher the time value of money really helps the premium decay. I do trade a few naked, but mostly like the spreads (conservative by nature and with many scars where I let things ride a little too much).
Mave been very happy since I moved my IRA from "CyberTanker" in June after waiting some 2+ years for them to get options spreads, only then to find out they would not allow IRA's and after the lawyers got involved, the restrictions were just too great. Even on leaving them, they bounced my final check "on error" causing me $90 in bank NSF changes and 2 weeks delay in obtaining my nmoney. "Good Riddance"
.02