SPX Credit Spread Trader

Ditto squared:

I may have been perceived to be a hard-core credit spread trader, but this month has definately proven why one needs to have more than one tool in the box.

After all, ultimately isn't this a learning forum. Since I've been on the thread for well over a year, I think I can safely say that we have at one point or another touched virtually every FOTM credit spread question one could think of. I often see the same question asked over and over again. Unfortunately, finding the information is the trick in this forum (maybe we can get Mo to provide a one hour seminar :))

Like any learning, it's time to include more knowledge (i.e., different types and flavors of spreads). After all, one doesn't stay in the 3rd grade forever.

And truthfully it's all about making money. If we can find a better way, why wouldn't we. And hey, Coach is willing to risk his money, so what more could we want :)

Quote from jeffm:

Ditto.

It must be Phil's lawyer training that lets him keep his cool :)

I thought all internet discussion threads were legally required to devolve into a flame war. This has been an outstanding break from the usual fiery fare. The credit (heh) for that goes to Phil.

I know a couple of the hardcore spread-only people are turned off by all the discussion of other strategies. But I also think this month's action is a good demonstration of why it is helpful to have more than 1 bullet in the gun. Just keep the thing pointed in a safe direction...
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Quote from optioncoach:

Closed both GOOG Cross Flys for a net credit of $6.05

Cost = $1.55
Profit = $4.50 or $2,250 total

Not bad for a little earnings fun lol...
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How much it would cost you to unload a 490 call fly and 410 put fly at these prices?
 
I dont know what got into riskarb today but he is not speaking for everyone. Nobody is that dumb to follow trades that blindly.I have around 2 years experience in trading in which i have seen a lot of things.
Riskarb is not required to watch over anyone.I am sure we are all here to learn different trading strategies and OC is doing a great job of teaching us.
I admire his professionalism and diplomacy unlike some sleazy people here.
I vote for OC to continue his different strategies testing.
 
As part of the Coach/Dr. Phil show:

Here's my list of things learned this month (regarding FOTM credit spreads only :) the other list is too long)

1) I've given up the bear call only strategy. I will now be adding put diagonals to my strategy when appropriate. I looked at the losses I've taken over the last two years and everyone has been on my bear calls; not one on the bull puts. There was one loss that was precipitated by adjusting a bull put but that bull put never really was breached. The adjusted bear call though was. Despite my black swan fears, my strategy has just not been supported by the facts. So it's time to change. I'll probably still do less put contracts, but I will be adding them.

2) My strategy in the past had been to offset and end it at that. This month after offsetting I decided to open new positions (as part of the adjustment). Stepped out in front of the train again. As I look at the months where I've lost money, I've consistently done much better (read: lost less) when I offset only and move on to the next month; as opposed to offsetting and opening a new position 5 to 10 points further OTM in the same month. Coach seems to be successful at this but I'm not. Perhaps it's related to item 3)

3) I'm going to take the time to learn technical analysis and will be adding it to the timing of my positions. It's no panacea and I think I can safely say that the vast majority of technical analysts got caught with their pants down this month; but still I believe it needs to be part of my learning process.

Finally, does anyone know of a simple book that discusses the greeks. I'd like something that provides a lot of examples. Something other than Cottle.

Thanks.
 
Actualy a lot of the technical signs were pointing bullish. Where I personally got caught at the end of SEPT was the magnitude of the move and how far we would run past new highs.

Quote from rdemyan:



3) I'm going to take the time to learn technical analysis and will be adding it to the timing of my positions. It's no panacea and I think I can safely say that the vast majority of technical analysts got caught with their pants down this month; but still I believe it needs to be part of my learning process.
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How wide are you willing to go on the put side? To collect what size credit?

Calls, I can see. Although calls have not worked out this month due to the current market action. But to get a credit on puts, you either have to get closer to the market (a 0.25 delta for instance), or you have to settle for a huge spread (i.e. 80-100 points on SP).

Do you use some kind of timing to enter these trades?

I use a basic stoch to enter my put shorts, so this has been a slow month for me. My stoch has been stuck at the top for weeks now. I need to take my charting software in for a tuneup. I think that stoch must have slipped a gear or something. I slapped it a few times, but the damn thing just won't come down :D

Quote from dagnyt:

Debits are not mandatory. Doesn't anyone, besides me, use wider strikes and collect credits for diagonals?

Mark
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To close both a 380 PUT and 460 Call Calendar now it would result in a net credit of about $14.50.

Quote from rallymode:

Could you give me mid prices, i am away from my TOS platform.
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Can someone tell me how diagonals settle? I seem to have forgotten.

I think it goes something like this:

1. The market gaps up just long enuff to get a sweet SET so your short leg will settle ITM

2. Then the SPX drops so the long leg gets cheap for the market to buy back over the weekend.

Right?
 
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