OEX weekly options

T J

Something wrong here with my debit spread system?

My entry spread varies a bit, from $3.80 to $5.50 right up to now. I went into the PUT buy side with the bought part in the recent Index move down. The sold side is still out of the money. The spread "I THOUGHT" was supposed to widen on the movement of the market, OVER the ATM point into the ITM point, bought side.

The spread does not move much for the CLOSING PRICES. It goes like from $3.40 to $2.40. I thought I should sell, if it got to $5 on the widening. This is two strikes apart, 45 days out month. ( Nov. )

So in doing something else with another method I wanted to try. I got to run spread figures and VOILA! ( substitute for lack of an option calculator at home ) Decided to use the option chain in BIG CHARTS and see what would happen if this spread advanced the bought side a couple more strikes into the money. NADA! ZILCH.
If anything, to CLOSE the spread it narrows, or stays the same for CLOSING PURPOSES around $3.50 or less. Less than the cost of me putting it on. There seems to be no profitable effect on the DEBIT SPREAD. It does not widen as you keep the same sort of spread going down the option chain, the same spacing.

Whats going on here?
 
TJ, I just realized why I couldnt answer the spread/condor comparison question. I HAD NO CLUE WHAT A CONDOR WAS!
I had only looked at Iron Condors, with the call/spread combination, but never at condors. Now I know what a condor is, I can honestly say I know nothing about them at all.

Thanks Michael
 
Quote from Stanford:

TJ, I just realized why I couldnt answer the spread/condor comparison question. I HAD NO CLUE WHAT A CONDOR WAS!
I had only looked at Iron Condors, with the call/spread combination, but never at condors. Now I know what a condor is, I can honestly say I know nothing about them at all.

Thanks Michael
More...

:-). It is not dental surgery. It is just easy stuff that you will get used to over time. The issue is to make a profit. The names are less important.

Did you receive my email? I have sent two emails (one today and one yesterday).

By the way, with regard to intellectual rights/patent rights discussion, I am concerned about the brokers reverse engineering and claiming rights, and/or using the methods without paying royalty rights. We need to deal with this one in some way so that if they do, I have a basis to address the issue.

If you speak to your brokers, could you also ask about the australian dollar interest rates. If one were to build a position, and use USD dollars as margin, do they charge interest rates on the margin in australian dollar. For instance if I have a margin need of 25K (australian), and I have 25K USD, then does it mean no interest rate charge on the australian margin?
 
Quote from falconview:

T J

Something wrong here with my debit spread system?

My entry spread varies a bit, from $3.80 to $5.50 right up to now. I went into the PUT buy side with the bought part in the recent Index move down. The sold side is still out of the money. The spread "I THOUGHT" was supposed to widen on the movement of the market, OVER the ATM point into the ITM point, bought side.

The spread does not move much for the CLOSING PRICES. It goes like from $3.40 to $2.40. I thought I should sell, if it got to $5 on the widening. This is two strikes apart, 45 days out month. ( Nov. )

So in doing something else with another method I wanted to try. I got to run spread figures and VOILA! ( substitute for lack of an option calculator at home ) Decided to use the option chain in BIG CHARTS and see what would happen if this spread advanced the bought side a couple more strikes into the money. NADA! ZILCH.
If anything, to CLOSE the spread it narrows, or stays the same for CLOSING PURPOSES around $3.50 or less. Less than the cost of me putting it on. There seems to be no profitable effect on the DEBIT SPREAD. It does not widen as you keep the same sort of spread going down the option chain, the same spacing.

Whats going on here?
More...

FV:

Do not rely on closing prices. It is usually the last trade on the option, which is not corresponding to the same value of OEX. There is also the bid/ask spread. So the point is: look at real time market, not at closing prices

In addition: did you consider reversing your ideas: playing short term debit spreads , and long term credit spreads. Currently it is credit for short term, and debit for longer term.

Also check ToS. You should have a calculator in there. If not, let me know I will send you a URL on where to compute them.

If you have excel I can also send a URL to download it.
 
TJ, yes thanks I did get the emails.
A lawyer is needed to help witht the intellectual property. Haven't had a chance to talk to the broker yet. Early next week, Michael
 
Your learning experience made me think about whether I should consider making a site where subscribers would enroll in a course on options.

I do not want people to get mad at me, so if I do it, I am thinking to do it as pay what you can. If a subscriber thinks he should not pay, or does not have the money to pay, then he gets it for free. Those who pay would pay what they think it is worth. Customers would decide on the price.

If you have any comments, would be interested to read them.
 
Great concept, but you need some work on what you think your knoweldge is worth!

Do not offer to let people pay what they can, or most will choose nothing. If you can give them value, which I am sure you can, and you can show them the value, they will pay.

I know I sure would! The key is to educate people as to how much they could save by not making the usual beginner errors. I have found that when you give things away, people really think that is what it is worth.

Michael
 
Quote from Stanford:

Great concept, but you need some work on what you think your knoweldge is worth!

Do not offer to let people pay what they can, or most will choose nothing. If you can give them value, which I am sure you can, and you can show them the value, they will pay.

I know I sure would! The key is to educate people as to how much they could save by not making the usual beginner errors. I have found that when you give things away, people really think that is what it is worth.

Michael
More...

Excellent post!

There is a case you may want to be aware of. There was a guy who lost his whole account, and even more due to one little "mistake". He had option positions (spreads with limited risk), and other non option positions in the same account.

The market moved fast, and he had a margin call. The robot took some of his option positions off , and that triggered a series of margin calls because the removal of one option position made things worse. Since the market was moving fast and bid/ask spreads large, the bid/ask spreads were expensive, and the random manner in which the liquidation was made led to the closure of all positions, and the net effect was that he was lost his account and even OWED money to the broker. He went from something like 10K to a minus number.

So be careful about this part, in case you did not think about it yet.

(If I do not post in the next few days, I will try to check early next week--- have a good weekend if I do not show up before then).
 
T j

I read a lot of free tutorial option trading sites. I find them informative to the point of all being the same blanket setup.

What I am always looking for is sites that explain a particular strategy, or tweak a strategy that make something work, which they don't explain with the standard explanation will do. These are very few and far between. To be different you would have to offer special working type of insights. For instance, how far must the index move to make a profit for a particular spread and month.

Yes I am looking to play short term debit spreads. I want a profit in 4 OEX index points movement in my direction.

I'm thinking of going back to the standard 1 strike OTM debit spread again and one strike apart. The same month, which right now is OCTOBER. I was trying to avoid getting close to TIME DECAY speed up in the last week. So I went out another month. That may be part of the problem. Whether the three strike apart business effects it I don't know? I guess I was feeling disappointed, but we shall see what tomorrow brings in real time.
Thank you for the comments!
 
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