Spreads and expirations question

[rselitetrader]

Here is an example of a meltdown: at the beginning of Apr this year, I didn't think SPX was going to break above 1470. I placed a credit spread -1470C/+1480C with 20 contracts. To my amazement, the loss now is more than $24,000! What is worse, the loss is too rapid to take action because I have a demanding profession.

Fortunately, this is a paper trade. What I learned is that credit spreads and iron condors all have EVIL, adverse expectancy, risking too much margin and capital for very little gain when the same capital can be more wisely invested somewhere else or in some other strategies.

RS

Quote from demoship:

Rick, if you're doing things like options worth a nickel, or 10 cents, 95% of the time you'll win, then once in a while you'll have a meltdown that'll cost you big time.

If you want to do it, go for it, but don't put too much into one until you've experienced a meltdown so you can better prepare for it next time.

 

[MTE]

Quote from rselitetrader:

Here is an example of a meltdown: at the beginning of Apr this year, I didn't think SPX was going to break above 1470. I placed a credit spread -1470C/+1480C with 20 contracts. To my amazement, the loss now is more than $24,000! What is worse, the loss is too rapid to take action because I have a demanding profession.

Fortunately, this is a paper trade. What I learned is that credit spreads and iron condors all have EVIL, adverse expectancy, risking too much margin and capital for very little gain when the same capital can be more wisely invested somewhere else or in some other strategies.

RS

You posted it twice for maximum effect!?
(JK, sorry!)

 

[nikko309]

Quote from rselitetrader:

To my amazement, the loss now is more than $24,000! What is worse, the loss is too rapid to take action because I have a demanding profession.

Fortunately, this is a paper trade. What I learned is that credit spreads and iron condors all have EVIL adverse expectancy, risking too much margin and capital for very little gain when the same capital can be more wisely invested somewhere else or in some other strategies.

As for your conclusion about credit spreads and iron condors, I disagree. All positions have an adverse possibility. You should trade those that are in your comfort zone and within your ability to manage. You learned that you shouldn't trade anything that you can be around to watch.

 

[rselitetrader]

I honestly don't know how I posted it twice. Probably doing it half asleep around midnight

You posted it twice for maximum effect!?
(JK, sorry!) [/QUOTE]