OEX weekly options

Stanford

figuring things out.

Vertical credit spreads as a directional play in the monthly.

The NDX went up from 1860 to 1882 and the CALL SPREAD lost $8.30

The same index move upward ( bull move) the PUT spread made +$2.20

OKAAAAAY !!! Vertical spreads as a directional play?

From this it doesn´t take much of an index move to make money. If you get it right? 22 NDX points would be only 4 OEX points, not even one strike.

Lets see on 50 contracts that would be $2.20 x 5000 is $11,000. Your margin would be $25,000 a time.

Very interesting and something to think about. WOW!
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So far with 40 mins to go I cannot make sense out of the premiums being offered. The strikes are also all mixed up, out of order. In the weeklies! Have to see in the morning I guess?
 
falconview, when you say the put spread made $2.20 does that mean that it would have cost $2.20 less to close it out compared to the credit you intially got?
Thanks Michael
 
Falconview,

Perhaps but ive mad some serious coin on his oex plays. Atilla is the moderator & its his site but he has been away for forever traveling. Mitch Martin post on the forum, his oex swing trades are solid imo.

Mitch Martin 08/30/2010 07:36 PM in reply to cut_your_losses

Yes holding.....Ive just started my LT position(1055-1040). I think we head lower tomorrow at the open & then possibly reverse toward the close. Either way Im guessing we head up big on wednesday.
 
STanford

You hit a sore point. I was trying to puzzle that out last night and didn't figure it out. If you get an answer please tell m

I originally got a credit right? So which of the two credit spreads made money. The Call spread because the market moved toward it? Or the Put spread? DARNED IF I KNOW!

Maybe one of the experts on here can explain it to me and you?
 
Falconview, when you said they made money, are you talking about the p/l shown on the page? I think you have to look at ho wmuch it would cost to close the position before you can get a true picture.
I have one position open, and yesterday is showed a profit of $400. But it would have cost me $800 to close it, so the profit comes from the difference between the original credit of $1200 and the cost to close of $800. Today the profit shows at $800, and the cost to close should be the original credit of $1200 less cost to close to equal $800 profit. When I looked on the chain, the cost to close would have been $400 so voila!
Also, remember on your 50 contracts the margin is $125,000 which Ithought was more than what you wanted to use.
Let me know if you have any more insights.
thanks Michael



Quote from falconview:

Stanford

figuring things out.

Vertical credit spreads as a directional play in the monthly.

The NDX went up from 1860 to 1882 and the CALL SPREAD lost $8.30

The same index move upward ( bull move) the PUT spread made +$2.20

OKAAAAAY !!! Vertical spreads as a directional play?

From this it doesn´t take much of an index move to make money. If you get it right? 22 NDX points would be only 4 OEX points, not even one strike.

Lets see on 50 contracts that would be $2.20 x 5000 is $11,000. Your margin would be $25,000 a time.

Very interesting and something to think about. WOW!
---------------------------------------

So far with 40 mins to go I cannot make sense out of the premiums being offered. The strikes are also all mixed up, out of order. In the weeklies! Have to see in the morning I guess?
More...
 
falconview, part of my strategy is to close a spread when the profit reaches 80% of the maximum credit. So for me, when the profit shows $1000, I will close it. You loose out on the extra $2000, but any added risk is not worth it, unless you are very close to expiration. If this was real money, and I one week away, I would close it.
Michael
 
Stanford

I still don't know how to calculate it, as I've lost my working scratch paper. I know I sold it originally for a .30 credit. If I remember rightly when the market moved up, I closed it for $2.20, which I thought was a + amount? There is where I get confused.
Because the Call Spread lost - $8 as the index moved to it, then I presume the $2.20 I got when closing was positive. Not sure about any of this, I need it explained to me by somebody.

Or I'm going to do it again this week. I was working from the fact you had made $9000 on a bull run with your put spreads. I think this is a directional play and would like to know for sure.

I have devised a new forecasting method and predicted early hours of this morning that the market would jump UP at the open. Glad to see it did.

In the meantime IF I have the directional play on a Vertical Spread worked out correctly, that you can make money on it. I am developing a new system for directional Vertical Credit Spreads, in which I'm looking for a DEFINITE signal that the market is going to move in the direction forecast. That said, if it works out in practice, then these trades would be the time to pile on the contracts in both the OEX and NDX monthly. Was planning to trade the OCTOBER monthlies next week. I cannot get in a spread this morning yet. At least not where I want it.

Margin is HALF the amount of your number of contracts. 50 contracts is $25,000. It is $500 a point per contract, at least in the OEX. Don't know if the NDX would calculate differently on this? Be interested to find out. If you do, tell me.
 
Stanford

Okay thanks for that information on NDX margin. I put on a scratch paper trade just now for 20 contracts of 1875/1750 for a credit of .70 cents. That is $50,000 in margin and sold at .70 cents credit.
Went to a 2% deviation as it is a WEEKLY and expires tomorrow afternoon. That should be a $1400 credit minus the commission. Don't know what that is, but might be the same $160 or so? Maybe you can tell me? If so, then a net credit of $1240 should the market stay up through tomorrow. Otherwise it is panic and fear time.

In my TOS account I placed the same trade at 2% deviation, or at OEX 490, - 490/485 PUTS with a .10 cents limit and it got filled right away.

That is a credit of $500 - $160 = + $ 340 if I don't get hit.
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See how they both work out by tomorrow evening.
 
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