HowardCohodas Index Options Credit Spread Trading Journal
- Thread starter HowardCohodas
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I serial number each new series I enter with an IC number. It has no meaning other than to collect a PUT spread with the CALL spread that are paired to make it an Iron Condor.
If only one spread is placed then there is an opportunity to complete the Iron Condor. The second spread of an Iron Condor can be placed without any additional capital requirements. Also, adding the second spread gives you a more neutral market position.
I identify these Iron Condor opportunities by highlighting the IC cell with the unpaired spread.
Howard
You lost me there! Explain further?
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" Hmmm. I just checked. You can open a PUT 555/550 spread with a PoT on the short strike of 14% for a 3% return in 3 days. And there is good volume today. What more do you want?
P.S. Are you using the Fixed volatility per expiration date volatility strategy?"
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For Volatility I just click up the VIX chart online. See what it currently is. What index were you talking above? And how do you figure a 3% gain in 3 days? ( You must be figuring volatility in there someplace? )
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I did run a SPY and OEX straight buying in CALLS for the expected rebound. Kept it simple with 5 contracts in SPY at a !.36 and 1 contract in the OEX at $9.20. Finished at the end of the day with gains in both. Though SPY made more with 5 contracts. On a per contract basis the OEX made more. Closed them both half hour before market ended. The lesson if any, was with SPY and the minimal market maker bid and ask spread, would be better from the viewpoint of reaching breakeven and having a profit quicker, than the OEX. Though the OEX if the move proved strong enough would earn more per contract. Comparison contracts were more to do with equivalency in dollar amounts. Was trying to stay under $1000 in each.
I think I will do more SPY though as you break even a whole lot faster. Thanks to whoever sent me that tip.
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QUESTION FOR YOU HOWARD
How many losing credit spread trades are you taking per month. Average and actual count? I´m not counting rollovers, I just want the trades you closed at a loss with 20% of margin or less.
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DECEMBER - JANUARY straight buying options method return was 20% for December - January total account. I did have up to 24% returns at one point, but ended up with some losses that brought the returns back down to 20%. Remember I exited credit spread trading weeklies end of November.
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You lost me there! Explain further?
_______________________________
" Hmmm. I just checked. You can open a PUT 555/550 spread with a PoT on the short strike of 14% for a 3% return in 3 days. And there is good volume today. What more do you want?
P.S. Are you using the Fixed volatility per expiration date volatility strategy?"
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For Volatility I just click up the VIX chart online. See what it currently is. What index were you talking above? And how do you figure a 3% gain in 3 days? ( You must be figuring volatility in there someplace? )
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I did run a SPY and OEX straight buying in CALLS for the expected rebound. Kept it simple with 5 contracts in SPY at a !.36 and 1 contract in the OEX at $9.20. Finished at the end of the day with gains in both. Though SPY made more with 5 contracts. On a per contract basis the OEX made more. Closed them both half hour before market ended. The lesson if any, was with SPY and the minimal market maker bid and ask spread, would be better from the viewpoint of reaching breakeven and having a profit quicker, than the OEX. Though the OEX if the move proved strong enough would earn more per contract. Comparison contracts were more to do with equivalency in dollar amounts. Was trying to stay under $1000 in each.
I think I will do more SPY though as you break even a whole lot faster. Thanks to whoever sent me that tip.
____________________________
QUESTION FOR YOU HOWARD
How many losing credit spread trades are you taking per month. Average and actual count? I´m not counting rollovers, I just want the trades you closed at a loss with 20% of margin or less.
_____________________________
DECEMBER - JANUARY straight buying options method return was 20% for December - January total account. I did have up to 24% returns at one point, but ended up with some losses that brought the returns back down to 20%. Remember I exited credit spread trading weeklies end of November.
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At the time of the original discussion, OEX 550/555 puts had mid quotes of 0.625 and 0.775 respectively. If you'd filled at these mids, the credit spread would have given a credit of 0.15. The max risk (i.e. margin used) of the credit spread is 555-550-0.15=4.85 per contract (this is a basic credit spread calculation).
0.15/4.85=.031 which is 3% return on margin.
Howard, my last post got me wondering. When you figure out candidate trades are you looking for a certain %/day return? In other words, do you take the % return and divide by the days left to expiry and look for a certain minimum % return per day?
Obviously this is in addition to the PoT.
Obviously this is in addition to the PoT.
In 6 months of trading I have closed 77 spreads. 5 were for a loss.
Oct 14, 3.3% loss
Oct 14, 0.02% loss
month on month account return 11.3%
Nov 4, 1.7% loss
Nov 16, 30.3% loss
month on month account return 11.2%
Jan 28, 21.5% loss
month on month account return 11.2%
I would like to get your take on this as I didn´t understand it.
" Hmmm. I just checked. You can open a PUT 555/550 spread with a PoT on the short strike of 14% for a 3% return in 3 days. And there is good volume today. What more do you want?
P.S. Are you using the Fixed volatility per expiration date volatility strategy?"
" Hmmm. I just checked. You can open a PUT 555/550 spread with a PoT on the short strike of 14% for a 3% return in 3 days. And there is good volume today. What more do you want?
P.S. Are you using the Fixed volatility per expiration date volatility strategy?"
Stevegee
I follow your explanation, but Howard´s query involved a volatility comment and also a declaration of making the 3% in 3 days, which i did not understand.
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With an average of 2 losses per month and currently 22 trades for the month, the losses would have cancelled 8 winning trades. Leaving 14 winning trades,at 3% each would have earned total of 42% per month, based on individual returns. What the total account earns seems to be about 10% on average? From Howard´s comments he is investing ALL his account. He is compounding.
The trick is control of the losses and taking them at 20% of margin lost, this seems critical as also playing the VIX as an EDGE to stop doing Iron Condors over VIX 20. Though in a Bull Market trend, the Iron Condors give you FREE MARGIN trades and would boost your bottom line during a bull trend. I like BEAR Trends, as they seem to be step laddered down with pullbacks and you can do them with simple averages. You can invest everything in Bear Call Spreads.
The other EDGE so to speak is lots of small trades, the more the better I guess as practical with account size.
Whatever the opinions of others, it does seem to be a winning system?
I follow your explanation, but Howard´s query involved a volatility comment and also a declaration of making the 3% in 3 days, which i did not understand.
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With an average of 2 losses per month and currently 22 trades for the month, the losses would have cancelled 8 winning trades. Leaving 14 winning trades,at 3% each would have earned total of 42% per month, based on individual returns. What the total account earns seems to be about 10% on average? From Howard´s comments he is investing ALL his account. He is compounding.
The trick is control of the losses and taking them at 20% of margin lost, this seems critical as also playing the VIX as an EDGE to stop doing Iron Condors over VIX 20. Though in a Bull Market trend, the Iron Condors give you FREE MARGIN trades and would boost your bottom line during a bull trend. I like BEAR Trends, as they seem to be step laddered down with pullbacks and you can do them with simple averages. You can invest everything in Bear Call Spreads.
The other EDGE so to speak is lots of small trades, the more the better I guess as practical with account size.
Whatever the opinions of others, it does seem to be a winning system?
ToS permits you to choose one of three different volatility strategies. For the numbers I cite, I am using the "fixed volatility per expiration date" strategy. I wanted to make certain that we were comparing apples to apples.
2 losses per month??? 22 trades per month??? Are you talking about my account? If so, I don't know where your numbers come from.
I'm never ALL in, but sometimes close.
Of course I'm compounding. That's what rolling is all about.
Don't discount higher spread premiums during higher volatility. Certainly there are higher premiums on individual options.
Don't discount the success of my strategy in sideways months or down months. Sideways months offer the least returns because of limited opportunity to roll. Up months AND down months offer opportunities to roll and improve monthly performance.
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