SPX Credit Spread Trader

By the way... heads up from a technical standpoint. We are approaching an overhead resistance point from the past week or so downtrend at around 1183/1184. If we break through it could mean a new support level and us staying above 1180 at least.

Now it may bounce off initialy as markets usually do since it is right at the line now, especially since we are heading into slow lunch but lets see how we do in the afternoon if we can get above and close above 1183/1184. Would be a nice short-term bullish sign which is great for us for the next 4 days.

Stay tuned....

Phil

EDIT: 12:14 PM Blew right through it to 1185. So far so good. On any pullback I might go long futures...
 
rdemyan,

I'm curious, once the short strike is ITM, how do the dynamics of adjusting/rolling change? Is it different than rolling as we did this month?

The other thing is that this thread is an extremely valuable guidepost. One thing that hit home was Phil drilling into us risk management, and the fact that it's not the performance of any one month but the annual performance that counts....
 
"I’ll actually collect more in OCT premium than I would have before even after taking the losses on the roll"
-- Dr, yes that's true, but the flipside of that is that for the 10 or 11 other months of the year you did not collect on the unused margin...
 
OOOPPS yes I meant year lol. Based on the way I am selecting strikes. If you select strikes closer in, your frequency might increase. If you are even more risk adverse than me and willing to accept less credit, it may be only 1x or none a year.

Phil

Quote from andysmith:

"As I said from my experience, this will most likely happen once or twice a month."
-- Phil, please say you meant "year".
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I think in general it is always good to have some gunpowder in the barrell to use for trading oportunities or to buy back spreads to make an adjustment. Some months you may like having that free margin to add more contracts in an adjustment or if the opportunity presents itself.

How much? That depends on you. I have been using most of my margin I allocate the past few months but in OCT I did leave some open and grabbed the NOV spreads with it. When OCT expires I will be adding to it.

Phil

Quote from Dr. Zhivodka:

Months like these are exactly why one should leave some margin/haircut in reserve every expiration.

I had a "bunch" of the 118/116 OCT SPY spreads. Yesterday I rolled down to quantity (1.7)(bunch) of the 116/114 and 115/113 spreads. Now assuming (big assumption) all goes well I’ll actually collect more in OCT premium than I would have before even after taking the losses on the roll.

Tough on the blood presure though.

:cool:
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Andy:

I wish I could give you a well-thought out answer. At the time I was under extreme stress as I allowed this to go on over a weekend. By Monday, I got out at all costs and even though I lost quite a bit, it wasn't the worst case scenario, I was immensely relieved. Still it had a drastic effect on my subsequent trading. I was jumpy and pulled the trigger early on adjusting August positions and needlessly gave up premium that month (I probably should have spent a month recouping emotionally).

The one thing I really remember is that once you get at around ATM, it seems like the cost to get out has gone up exponentially and any amount you can get from rolling even 5 points is miniscule compared to what it costs to get out with an ATM short strike on the spread. Of course this is not unexpected, but it never really hit home until I experienced it. The other thing is that the stress is much higher than what we experienced this month, so you don't think nearly as clearly and the odds of making stupid mistakes increases. Also, I was on my own and I know that if I had asked for help in a forum such as this, I could have reduced my losses.

Further, as Coach has just posted I was a victim of my own success in previous months and had too much margin allocated to credit spreads.


Quote from andysmith:

rdemyan,

I'm curious, once the short strike is ITM, how do the dynamics of adjusting/rolling change? Is it different than rolling as we did this month?

The other thing is that this thread is an extremely valuable guidepost. One thing that hit home was Phil drilling into us risk management, and the fact that it's not the performance of any one month but the annual performance that counts....
More...
 
Coach:

Are you holding out on us? What November spreads?? :)


Quote from optioncoach:

I think in general it is always good to have some gunpowder in the barrell to use for trading oportunities or to buy back spreads to make an adjustment. Some months you may like having that free margin to add more contracts in an adjustment or if the opportunity presents itself.

How much? That depends on you. I have been using most of my margin I allocate the past few months but in OCT I did leave some open and grabbed the NOV spreads with it. When OCT expires I will be adding to it.

Phil
More...
 
This is true. But my goal in this game has always been to make a living in the markets and to do so with longevity. To do this one must often sacrifice unused haircut. Just nature of the game.

Consider the alternative. I could max my haircut every day of every month. Certainly I would have higher returns. But most assuredly I would blow out in a 2 sigma event....which occurs all too often.

It's axiomatic.

Depends on your goal. Do you want be a bright shinning star that flames in a year, 3 years...5years? Or you want to be an old gray warrior that pulls money from the market for the rest of your life?

Regards,
Dr. Z


Quote from andysmith:

"I’ll actually collect more in OCT premium than I would have before even after taking the losses on the roll"
-- Dr, yes that's true, but the flipside of that is that for the 10 or 11 other months of the year you did not collect on the unused margin...
More...
 
Here is the NOV position I posted on 10/4.

I was nervous about that a little too but was more focused on OCT for now.

Phil


Quote from optioncoach:

NOV POSITIONS OPEN FOR BUSINESS.

Although market is a little flat I decided to grab some NOV put premiums with some margin space:

STO 90 SPX NOV 1150/1160 Put Spreads @ $0.65 (.2/1.50)

Credit = $5,850
Risk = $90,000
Return = 6.5%

Looking forward to adding to it as OCT position melt away in this flat market as of late. Will be posting the SEPT results in a little while.

Current OCT Positions:

-110 SPX OCT 1165/1175 Put Spreads @ $0.55
-100 XEO OCT 530/545 Put Spreads @ $0.65

New NOV Positions:

-90 SPX NOV 1150/1160 Put Spreads @ $0.65

Phil
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