Extended hours over SPY and generally over the official US market hours for stocks and stock options. These are not extended hours for futures traders.
Though yeah, ES is longer than SPX. I trade SPX options starting midnight my time.
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Gambling on Weekly S&P500 options
- Thread starter bellagioprince
- Start date
Extended hours over SPY and generally over the official US market hours for stocks and stock options. These are not extended hours for futures traders.
Though yeah, ES is longer than SPX. I trade SPX options starting midnight my time.
Did you take any assignment so far ? It can be very painfulI trade the /ES options. Vertical credit spreads only.
Spx options are open from 930 to 4 with a 400 to 415 extend. Everyone here is talking about spx futures Those hours are from 6pm to 5pm the next day
As mentioned by others, SPX options also trade from 3am to 915am etSpx options are open from 930 to 4 with a 400 to 415 extend. Everyone here is talking about spx futures Those hours are from 6pm to 5pm the next day
Did you take any assignment so far ? It can be very painful
No, no assignments.
May I ask how long you are doing this and how you avoid assignment? Do you put your short leg deep OTM? I think assignment is inevitable in the event of black swan market crash.No, no assignments.
On the other hand, If you have not taken any assignment from your short leg so far, what is the point to have a protective long leg ? Why not just go short naked and fully leveraged on the margin ?
May I ask how long you are doing this and how you avoid assignment? Do you put your short leg deep OTM? I think assignment is inevitable in the event of black swan market crash.
On the other hand, If you have not taken any assignment from your short leg so far, what is the point to have a protective long leg ? Why not just go short naked and fully leveraged on the margin ?
Been doing it for a number of years. No assignment because the /ES options are European style (except for the options that expire this coming Friday) meaning they can only be exercised on expiration day. In any case I always take action on any position that's being challenged (well before the expiration day) in any case. As I said in a previous message I always close or roll a challenged position. But if, for example, there was a black swan event and the price blew through my position leaving one or both legs in the money then the worst that could happen is closing the position and taking a small loss (i.e. the difference between the stikes+commissions+fees.) Far more palatable to me then risking an opened ended (in the case of calls) loss.
Buying the long (protective) leg does two things, it defines the risk. I know, going in what the maximum profit and loss will be. Whereas undefined risk trades can theoretically produce an unlimited profit but also unlimited losses. And the undefined risk trade, i.e. selling calls and/or puts outright (e.g. a strangle or straddle) with no long position(s) for protection increases the capital requirements from about $450.00 for the 10 wide /ES vertical spread to about $9,700.00 for the one short position or strangle or straddle. I'd rather not commit that much capital to a single trade vice making a series of trades using less capital.
Finally, to answer your other question, my short leg is generally 16 Deltas OTM (1 SD) which gives me an 85% probability of expiring OTM. The long leg is usually 10 points farther OTM. This morning, for example I sold an /ES 3625/3615 Put spread for $1.25 and a 3730/3740 Call spread for $1.00. The Deltas for both short positions were 15 and 14 respectively. A little lopsided but it got me what wanted. This was for the Wednesday (Week 3, E3CZ20 ) options that expire the day after tomorrow.
In summation, no, I've never been assigned and, no, I don't do undefined risk trades. Nor intend to.
Best (and happy holidays)
BL
I think it is better to let the challenged leg to expire. Most of the time the market will come back and close in your favor. I did backtest this and noticed that closing challenged position early will do more harm than letting it burn all the theta and participate in a potential market rebound in the last hours before expiration.But if, for example, there was a black swan event and the price blew through my position leaving one or both legs in the money then the worst that could happen is closing the position and taking a small loss (i.e. the difference between the stikes+commissions+fees.)
Moreover, you have sold another spread on the other side that will make-up for part of the loss. For example, if a black swan happen tomorrow, your /ES 3625/3615 Put will be challenged and generate max loss of $500. But your 3730/3740 Call spread will make up $50 of that loss.
Thank you very much for you detailed response and happy holidays to you too.Best (and happy holidays)