Debit vs credit spreads

met1989 · Mar 18, 2019

how could it be that a credit spread does not go through on any price from mid to nom and debit spreads get filled right away on mid how come ?

ajacobson · Mar 18, 2019

It makes no sense. The exact parity exists for credit spreads - the parity is a debit and the two together complete a box - assuming we are not talking about some funky trade. So the theory of parity doesn't get you filled.
Ask your broker, because if they are simple verticals they are doing a poor job. Same with diagonals.
Is there a material omission of facts? Some form of a ratio or some illiquid product?

met1989 · Mar 18, 2019

ajacobson said:
It makes no sense. The exact parity exists for credit spreads - the parity is a debit and the two together complete a box - assuming we are not talking about some funky trade. So the theory of parity doesn't get you filled.
Ask your broker, because if they are simple verticals they are doing a poor job. Same with diagonals.
Is there a material omission of facts? Some form of a ratio or some illiquid product?

I was placing a Bwb on the ES I think it’s kinda liquid no?

ajacobson · Mar 18, 2019

Not great for spreads - IMHO.

met1989 · Mar 19, 2019

ajacobson said:
Not great for spreads - IMHO.

Why?

ajacobson · Mar 19, 2019

Long answer - but if I were going to do a BWB I'd opt for the SPX. Better "option" mindset amongst the group that provides liquidity. Plus the ability to facilitate means you often have better liquidity in spreads.

met1989 · Mar 19, 2019

ajacobson said:
Long answer - but if I were going to do a BWB I'd opt for the SPX. Better "option" mindset amongst the group that provides liquidity. Plus the ability to facilitate means you often have better liquidity in spreads.

I agree with yiu the reason I use the ES is cause they have 24 hour reading and there is no pdt rule if I use Spx and lets say I close or adjust my portion in one day I’m screws

ajacobson · Mar 19, 2019

OK, but as you pointed out pricing is poor. Friction isn't just brokerage or margin alone.

met1989 · Mar 19, 2019

ajacobson said:
OK, but as you pointed out pricing is poor. Friction isn't just brokerage or margin alone.

I think TDAMERITRADE isn’t the best broker in town

motterpaul · Apr 21, 2019

met1989 said:
how could it be that a credit spread does not go through on any price from mid to nom and debit spreads get filled right away on mid how come ?

Because far more options players would rather write a call then buy one. Most spreads are done for the credit you get from selling one.