SPX Credit Spread Trader

Hey Chris! Good to hear from you. yes this past week has been hectic and stressful lol.

Well I have never done it over 2 days but if the market moves lower the next day, the good news is you can get more credit than you would have gotten the day before. The risk is that the market moves higher and you get less than you hoped but sicne the overall goal was to adjust lower for more cushion, then the ends results is what matters I guess. But since you need the premium to come in, you want to sell another spread the next day, unless you see a huge drop coming in the futures. In that case, just wait a little and then you can go further OTM. Just reassess what is happening in the morning of the next day to decide what strikes and premiums to go after, if at all.

Phil


Quote from clslaw:

Hey, Phil!

Just thought I'd drop in and see what you're doing with this market the last few days. Our brokers are loving us this week! I've been rolling call spreads to lock in profits and today finally triggered an adjustment on the put side. A little ugly on the downside today!

Here's a question for you. As I mentioned, I needed to roll my bull put spread and placed a limit order to close. It was filled, but not until late in the day when the market saw some rebound. With a relatively short period of time left before the bell, I did not get filled on the new put spread so I'll be back at it tomorrow. How do you deal with the risk of making the adjustment over the course of two trading days?

Good luck with your positions!

Chris Smith
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I usually have CNBC on before the market opens. They talk about where the futures stand relative to "fair value". If below fair value, then they anticipate a lower opening and vice versa.

What is fair value and how is it determined.
 
Quote from rdemyan:

I usually have CNBC on before the market opens. They talk about where the futures stand relative to "fair value". If below fair value, then they anticipate a lower opening and vice versa.

What is fair value and how is it determined.
More...

Btw, you can chart the premium of S&P futures to spot price by using $PREM or $SP-PREM or $PREM.X etc. depending on who you're using.

This is can be useful for piggybacking/playing arbitrageurs buy/sell programs if you're doing e-mini day trading.

Momoney.
 
Well, I'm nervous about my position as well and had to adjust today. Unfortunately, I did not get a good fill on the newly purchased bull put because of the volatility. As usual, once you close a bull put to adjust, the market turns around and heads back up reducing what you'd hope to get.

Hear are the numbers:

original: SPX OCT 1150/1160 bull put filled at $0.50 (SPX was at 1232 at the time)

adjustment:

Closed 1150/1160 for $2.50
Opened 1140/1150 for $1.10

Haven't put on a new bear call, but I took the opportunity to get out of an existing Nov bear call for a nice little profit.

Closed: 1290/1300 Nov bear call for $0.45 profit.

Still nicely positive for October (about 5% on margin), but still concerned about this down trend.
 
November put spreads are not offering much in the way of downside strikes. It appears the market makers are not in a hurry to open new lower strikes... at least not in $10 increments.... any particular reason?

Anyone attempting to use these oversold positions to roll into November Put spreads?

Murray
 
Actually, I just doubled up on my 1140/1150 position.... tons of premium for only a week remaining and severe oversold conditions.

Let's hope for at least one good up-day!

Murray
 
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