I sold a big call credit spread.

[xflat2186]

In pure statistical terms you're absolutely correct, thanks for pointing that out.

I guess my comments were more off the cuff and geared more at the fact that hedge funds are not putting on 17 cent or less call spreads and calling it a strategy they can sell.

Heiasafari, thanks for correcting me and the kind words I think you add a great deal here as well with your sharp eye and quest for the actual facts.

 

[heiasafari]

Speaking of strategy than can be sold...

Don't you think that this could be used very efficiently for a monthly income sort of fund? If we look at whats out there, a 7-8% return on a yearly basis that has not capital returns seems fine to me... For me it is hard to believe there would be no market for that.

If a HF or whatever other kind of fund did this sort of 0.05/0.95 very high prob spreads, I think there would actually be a market for it. Would the average client understand the strategy? No but as a former retail investor broker, I can say the average retail client doesn't understand sh*t about what they are invested into anyway.

 

[ramaTrade]

Even for a retail options trader, your spread size is not big.

 

[christianhgross]

Quote from xflat2186:

Donna, that ratio sucks no matter who looks at it and no funds are sitting around selling call spreads and staying in business.

Hmm... GE upgrade... That 16/17 spread sort of looks REALLY good... Sure it yielded less, but it is a safe zone...

It is trading at 14.48... And we still have 9 trading days left... They might push this sucker just to piss everyone off...

GE might drop, and it all depends on what the market will do in the next couple of days. But then again maybe not... It will probably come right down to the wire...

 

[spindr0]

Quote from christianhgross:

It is trading at 14.48... And we still have 9 trading days left... They might push this sucker just to piss everyone off...

GE might drop, and it all depends on what the market will do in the next couple of days. But then again maybe not... It will probably come right down to the wire...

Up, down, all around and for the trifecta, maybe it goes nowhere

 

[christianhgross]

Quote from spindr0:

Up, down, all around and for the trifecta, maybe it goes nowhere

Looks like it increased a dollar to 15.38. Thus if the position was not closed it would be loosing quite a bit of money. Considering the theta has collapsed and there is very little premium this trade was a bit too risky.

This is what I meant from my previous point saying the 16/17 spreads. You might only make 5%, but at least you will make 5%... Not loose all of your money and then some.

You never know the market might push GE down, but at this point that is hope. And when you are using hope as an excuse it is not a good sign.

So a hedge fund that sells 5% returns for a month's work will sell to investors, in comparison to a potential 18% return that gets walloped!

Making money in this industry is about fear and greed...

 

[xflat2186]

If you returned 18% for the year as a fund manager that would be freeking amazing. So looking at 5% or even 18% returns per month is not very realistic.

There is a reason why hedge funds dont sit there and sell verticals each month and call it a viable strategy.

 

[JJacksET4]

Don't mean to rub salt in the wounds if this position is still open, but here is a good example of some dangers of trying to take "easy" money with a directional credit spread bet.

And like a prev poster referred to, now a lose could be taken, or just hope that the next few days reverse and try to make it better, but it could still get much worse if GE continued up.

This is a reminder that it can always be good to consider taking profits.

JJacksET4

 

[xflat2186]

When your strategy is one of the big 3 thats not a good sign.

The top 3 strategies on ET and other boards tend to be
( no particular order)

1. hope
2. Wishing
3. prayer

As I noted earlier hedge funds who returned 18% a year ( a year not a month) would be considered world beaters, that’s why they don’t just sell verticals and call it a viable strategy.

 

[KINGOFSHORTS]

Quote from christianhgross:

Looks like it increased a dollar to 15.38. Thus if the position was not closed it would be loosing quite a bit of money. Considering the theta has collapsed and there is very little premium this trade was a bit too risky.

This is what I meant from my previous point saying the 16/17 spreads. You might only make 5%, but at least you will make 5%... Not loose all of your money and then some.

You never know the market might push GE down, but at this point that is hope. And when you are using hope as an excuse it is not a good sign.

So a hedge fund that sells 5% returns for a month's work will sell to investors, in comparison to a potential 18% return that gets walloped!

Making money in this industry is about fear and greed...

Yeah it went up faster than expected so I bought the underlying to cover delivery on assignment. at this point and sold to close out the 16 calls for 7 cents.

I bought quite a bit of GE at 14.78 today Basically I am holding a big ass covered call position.

Everyone is upgrading left and right the last few days.