SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Dear Options Coach,
I appreicate your contribution to my journal, I hope you will contribute to my journal in the future. Its my take that you are quite skilled in the area of options. I don't use options but I like a lot of the products that CBOE puts out. I've got a serious question to ask you. How important for you is the CBOE buy write indexes? I track them very carefully for the purposes of technical analysis on a daily time frame. They are clearly different than the underlying indexes for chart patterns. Its my opinion that at certain times the buy write will actually give a better key reversal signal with more consistency than the actually index. For example the rally this summer right at the bottom. The buy writes gave some classical key reversals where the real index was a technical pattern mess. I have attached some charts of what I'm looking at right now. The buy writes are really starting to look toppy where the indexes just look a little different. I would love for you to comment on this.
I appreicate your contribution to my journal, I hope you will contribute to my journal in the future. Its my take that you are quite skilled in the area of options. I don't use options but I like a lot of the products that CBOE puts out. I've got a serious question to ask you. How important for you is the CBOE buy write indexes? I track them very carefully for the purposes of technical analysis on a daily time frame. They are clearly different than the underlying indexes for chart patterns. Its my opinion that at certain times the buy write will actually give a better key reversal signal with more consistency than the actually index. For example the rally this summer right at the bottom. The buy writes gave some classical key reversals where the real index was a technical pattern mess. I have attached some charts of what I'm looking at right now. The buy writes are really starting to look toppy where the indexes just look a little different. I would love for you to comment on this.
Nice SPX/RUT pop up today on good FED and econ reports.
Taking this as an opportunity to profit take on my RUT credit spread rather than risk volatility through expiration.
50x IOW ISHARES Russel PUT FEB 80/78
Initial Net Credit: .43
Exit Debit: .13
Net Profit: .30 x 50 x 100 == $1,500
Margin at Risk: (2x$100x50) == $10,000
Trading days at Risk: 8 days
Return on Margin: $1,500/$10,000 == 15%
Effective Annualized Calendar Rate of Return: 608% >;->
TS
Taking this as an opportunity to profit take on my RUT credit spread rather than risk volatility through expiration.
50x IOW ISHARES Russel PUT FEB 80/78
Initial Net Credit: .43
Exit Debit: .13
Net Profit: .30 x 50 x 100 == $1,500
Margin at Risk: (2x$100x50) == $10,000
Trading days at Risk: 8 days
Return on Margin: $1,500/$10,000 == 15%
Effective Annualized Calendar Rate of Return: 608% >;->
TS
Yeah i wouldn't do ratio spreads on individual companies as well. Only on the indexes. No company specific risks but there's still the black swan
Time decay is good for the ratio spread but not for backspread as the underlying is approaching the closer strike. Just experimenting and think im gettin a good feel for them.