OEX weekly options

Quote from falconview:

Stanford

The volume indicator I sent you is still in the positive GREEN. So the trend is still running.
More...

I am in a hurry, and just stopped to check what is up in here. (I also have a number of PMs, and I could see that among the number of senders Stanford sent me a PM. Will answer later in the day/evening or tomorrow. I also have some from last evening from others).

Now the point: My models said yesterday to watch for the retreat. They picked after hours prices (0.10% higher than close of market yesterday) as potential top.

So far they are right, but the day is not over yet.
 
Trading Journal

My guess this is a false top signal. I had it earlier this morning.

The NDX other indicators are still showing UP.

Mind you I don't know for sure. I was looking for a credit spread at strike 2000 in the NDX and I cannot get it. On the other hand there is .15 cents at 1975 strike, with the NDX floating at 1934. This would be a marginal trade at best, with a 1975 Strike.

I think I'm going to skip this one for now and go shopping instead. The water pipe in one of the bathrooms has cracked and the handyman has broken the wall down and found the leak. So among other things to buy, is a pvc T fitting, going shopping with the wife and will check when I get back. I suspect though I'm out of the market for this WEEKLY trade. Unless there is something still there this afternoon when I get back. I'm still holding my Monday Bear Put Spread for .30 cents, which isn't much.

It could be a trend top, but I have a sneaking opinion that it might also be the beginning of a small jump either Friday or Monday UP.

Doesn't matter, I'm out of it and going to SKIP.

Chou!
 
Trading Journal

Okay my scratch paper trades. Going to close them down. Right now.

1)

The TIME SPREAD, the weekly versus the monthly
I sold for + .25 cents
I bought back for - .15 cents and that gained +.10 cents

The other side I bought for - $4.90
Sold for +$4.10
That gives me a loss of -.80 cents I had made .10 cents on the other side so my total net loss was - .70 cents. I had two contracts, so my net loss before commission costs was (- $140)

I apparently am not understanding something about TIME SPREADS and how to use them. Partially you said I should keep them the same price roughly. Got that point. But what else was effecting them here to give me a loss? You mentioned DELTA. Which means WHAT exactly. The CALLS did not move enough, or catch a volatility swelling of premiums enough is my guess?
ANYWAY the TIME SPREAD was a LOSS.

How do I fix the nuances of trading this to make a gain? They were out the money.
__________________________________

2)

The BULL CALL DEBIT SPREAD

bought OEX 510 at - $9.80
Sold OEX 515 at + $6.80
Negative at - $3 .00

Closing prices: Sold the OEX 510 at + $8.60
Bought the OEX 515 at - $6.40

positive at + $2.20

Net loss of: $3.00 - $2.20 = - .80 cents on 5 contracts that came to a loss of - $400 without counting commissions.

Okay TJ what went wrong here? Not enough market movement? Not enough volatility and premium ballooning caught? I'm suspecting a bit of both.
_________________
Lets see: The OEX was at 508.07 when it was put on. The OEX at closing is at 507. 59. So there is a slight loss and a few days of holding the BULL CALL DEBIT SPREAD. Not enough to have TIME DECAY effect it that much, but a little I suppose?

Conclusion:
What the BULL CALL DEBIT SPREAD needed is more market movement upward than it got. It kind of stalled out around the range of where it was implemented, when it needed to go up at leas 5 index points. That is my guess?_________________________

In review I suppose it is the TIME SPREAD I do not understand? The BULL DEBIT spread needed more market volatility.
 
Well my credit spread on the NDX with the market closed is in the good. We are 6% below the market action for the BULL PUT CREDIT SPREAD. Was not able to get into a decent strike with the upper credit spread, so let it go.
I suspect will expire properly tomorrow?

The trouble with the NDX is you can´t put on enough options because of the margin requirements. You can get further away OTM and you can get a premium the extra 1% OTM. But you can´t sell enough options to make enough money.

So we mentally gear up for NEXT WEEK TRADING. Drum roll and blaring trumpets. Now the Glockenspiel.
 
Well I will gross $450 this week with the NDX credit spread.
15 contracts with $37,500 margin
.012% return on capital before commissions were deducted.

On the other hand, if I had traded my standard 50 contracts in the OEX I would have grossed $750.
50 contracts with $25,000 margin.
3% return on capital before commissions were deducted.

__________________________

It's 5 a.m. and I'm looking for a jump, or opening GAP up, either this Friday morning, or Monday morning? What do you see T J ?
 
Trading Journal

Technical question:

Can't remember? Does the Bull Call debit Spread, or the Bear PUt debit spread. NARROW when it goes profitable, or does the spread widen? Can't remember but I seem to recall that one kind of spread widens and the other narrows. But can't fina ny mention on the internet.
 
Trading Journal

"Okay I got it. The DEBIT VERTICAL SPREAD is superior to straight buying of options in a directional play, because it insures you against the loss of TIME DECAY. The spread also widens. You can straddle the index which is the normal way, but you can also find better volatility, delta and premiums one or two strikes further out."

From the book OEX SPREAD TRADING TRICKS, of 1996.
 
TJ

Something I don't understand here. The NDX credit spread collected $450 at .30 cents. It expires today.

My TOS profit for it though is showing + $1012.50 in the running account on the trade. Why is that?
 
Falconview, doesn't that mean if you had actually closed it out earlier, you would have been further ahead than letting it expire?
Michael
And that perecentage again is 1.2% not .012% (that would be a poor risk).
 
New Post 09-17-10 04:21 PM

Falconview, doesn't that mean if you had actually closed it out earlier, you would have been further ahead than letting it expire?
Michael
_____________________

You lost me there? If I put on the credit spread and collected $450. How come I have $1012.50 According to TOS profit and loss on the trade. Did I make something extra somehow from index movement?

Yes I had maximum profit from yesterday, the $450 credit I collected I thought? But would have to pay a bunch of commission money if I sold it. Whereas if it expires later today, I don't pay any commissions and that money is mine.
 
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