who is your broker?
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
who is your broker?
Mech,
To set this up in TOS, first select a 4 legged spread like a Double Diagonal. Then click on Double Diagonal and change that field to custom. That will make all fields changeable so you can put in the correct # of contracts, etc for each leg. After hours TOS is showing a mid of 3.70 credit and natural of 2.30 debit, but the quotes are stale right now. The risk graph is attached.
Tim
Mech this is a conceptually interesting position. Do you have a link reference to this "Mickey Mouse Ear" spread? The PL plot has some interesting characteristics but it looks to me like all it really amounts to is a directional bet (fundamentally a debit spread) that pays at least a small residual reward irrespective of the directional guess but rapidly pays a max profit at a slightly smaller sweet spot when the market arrives into and or starts to overshoot the targeted trading range. It also looks like it would be good for keeping the trading account's net value and margin surplus held high while waiting for the market move. But what is more subtle to me perhaps is the management aspects of the position. Is the real benefit here to give you more trade-space to adjust the position or convert it to something else if the market breaks trend or accelerates? Clearly, the other nice thing here is that the trader gets up front premium for putting on what amounts to the predominant curvature of a debit spread. That's philosophically intriguing.
The negative overhead of putting on the position is compelling enough to warrant my interest. So, I'd love to read up some on the underlying technical rationale at work behind the scenes here and the trading advantage for putting on this kind of a position. Also if you can point to or elaborate on how to manage the position.
Thanks,
TS
oops - hang-over induced brain fart here. In the above forgo the comparison to debit-spread I meant to say credit-spread.
At any rate, its a very interesting position since we get to collect premium irrespective of directional move and have an opportunity to "extract" maximum profit if we ALSO called the direction properly when the market arrives into our moderately sized killing zone. This looks pretty good except for the case of a rapidly trending market that moves too fast to bypass the sweet spot (what I call kill zone) before we can get to close the position. That would go negative fast. In other words a black swan event or massive volatility shift (when playing this to the downside) from negative news (FED rate hike etc.) would be challenging. But I love the effect of getting some premium up front. I also love the the inherent stability that the position has in holding account net worth level while the market is slowly or moderately trending away or toward our max profit zone. But I wonder about the trading pragmatics. How hard it is to close out the entire position to extract max profit if the move happens early or the move it too strong and fast?
TS
At any rate, its a very interesting position since we get to collect premium irrespective of directional move and have an opportunity to "extract" maximum profit if we ALSO called the direction properly when the market arrives into our moderately sized killing zone. This looks pretty good except for the case of a rapidly trending market that moves too fast to bypass the sweet spot (what I call kill zone) before we can get to close the position. That would go negative fast. In other words a black swan event or massive volatility shift (when playing this to the downside) from negative news (FED rate hike etc.) would be challenging. But I love the effect of getting some premium up front. I also love the the inherent stability that the position has in holding account net worth level while the market is slowly or moderately trending away or toward our max profit zone. But I wonder about the trading pragmatics. How hard it is to close out the entire position to extract max profit if the move happens early or the move it too strong and fast?
TS
IB.
You didn't ask, but:
They have a trading platform that can be configured to suit about any feature a stock trader would need, but the feature configuration is not intuitive.
Good trading platform for stocks.
Challenging, sometimes painful, trading platform for Options. You can put together any kind of options combo strategy you can imagine, but it is a tedious and time consuming process that degrades with each level of complexity introduced to the trade. And I've not been able to find an feature that would present you with a simple 'MID' value between B/A.
Very good executions.
Excellent transaction rates.
Good money market rates.
More in the next post.
Excellent... and a 'Mid' calc of combo B/A... nice.
I plan to open a ToS account next week.
I'll spend a few months comparing ToS with IB. Plan to enter same trades at same time to compare executions.
I've been using their demo for three weeks and am pretty impressed with the platform features. Hope they compare favorably with the compelling features of an IB account.
That was the reason I was asking, as I do use TOS and love the platform for putting on complex trades at the same time and putting in as one order. They are more expensive than IB but the platform, customer service I don't think anyone can beat.
also your net credit for the trade is $360 or 0.36 per contract based on 10 contracts..correct?
Thanks again for sharing the trade...I do see the mouse ear 
hope you will let us know how it turns out.
hope you will let us know how it turns out.