SPX Credit Spread Trader

Falconview:

The NDX numbers were given in case you want to do a correspondence analysis of the NDX numbers to the OEX numbers.

As for buying or selling options, there is nothing wrong with the strategy. Remember my analogy: it is not about the umbrella or the boot, but also about the forecast. Find what suits you in risk and reward.

If I see your name on Forbes magazine, I will be happy. My best wishes to you for a top spot on Forbes Magazine.:)

USD/JPY: It is now stabilizing to rising . Maybe the Mammamotos and Papaheros are buying (Japan's session started). I do not know how deep is their pockets. We shall see.
 
Trading Journal

Well I missed getting in, just before the CLOSE yesterday with a Vertical Spread. Due to our electricity went out. I only had ten minutes until market closed and unable to get my battery operated back up computer going in such a short time, with loading the TOS program at my slow dial up of 115 kpbs, so gave it up for yesterday.

Did get a SHORT STRADDLE scratch paper memo trade on though to see what would happen?

Today Thursday morning completed my IRON CONDOR by legging in. Finally got a FILL on the overhead Vertical. Now we see if they expire okay tomorrow?

The SHORT STRADDLE had me annoyed this morning, it was not doing anything and holding too high and strong. However, a bit of a drop back to the mean average by the index, apparently put some TIME DECAY and volatility shrinkage in there and I'm at break even for the moment. Will hold and see how it works out, when TIME DECAY keeps kicking in for the rest of today THURSDAY and tomorrow FRIDAY and see if we can make something on it? Kind of curious about that?

Those are my two trades for this week and will sit and wait now for things to happen. Recline in my hammock on the verandah, it being a beautiful day around here. Watch the view across the two valleys we overlook. Got MARIMBA music going on my other computer and some lively tunes to keep your toes tapping while one relaxes, after two hours of strenuously watching premium prices and the index do it's thing.
 
Close on Thursday

Watching that scratch paper memo pad, SHORT STRADDLE CREDIT SPREAD to see how it performs done on scratch paper. The index went up and return back down to where it started when I put the straddle on. From yesterday afternoon until the close on Thursday it has made $3 on a contract. I believe I could have squeezed another $1 more out of it on entry. As on Wednesday I entered at $7.60 credit but later in the afternoon went up to $8.70 or so.
See what it does tomorrow. I'm presuming I am making money from THETA decay? Trying to understand how it works and tomorrow Friday is expiration for the weekly.
 
Trading Journal

2 hrs and 40 mins to go to expiration on the weeklies.

Was wondering about the short strangle I put on.

It´s a scratch paper experiment and I have it at 2 strikes away from the index action. If this thing expires between the two strikes, then I keep the credit? I put it on 2 strikes either side at the time. Seems like it might expire well.
 
Sanford and Trade Journal

END OF WEEK RESULTS

Total: $1745 Net income

Broken down into three trades:

1) Iron Condor credit spread trade for $930 net. both sides totalled. Done in the TOS account.

2) Another learning test Short Straddle trade of 1 option each side.as a practice trade to learn the nuances. $230 net total Done on memo pad.

2) Short Strangle credit spread trade of 10 options each side.
Net $610. Done on scratch paper memo pad as trades. Learning the nuances of this credit spread.

Not a bad week. I didn´t record a long PUT practice trade early in the week, that earned $720 on a $850 bet.

Conclusions: a) I´m probably ready to trade the Short Straddle in my account now. Also ready to trade the LONG PUTS, the two or three times a month they occur.

b) The Short Strangle credit spread, I will wait another week to try it again in a practice mode on scratch paper.

c) The biggest conclusion is that a correctly place and timed, LONG PUT trade buying is the best deal of all.

d) On a risk to reward ratio it would seem that SHORT STRANGLE Credit Spread is better than the Vertical Credit spread. Though I have not yet got the margin requirements to accurately figure that out yet. Until I do it in the TOS brokerage account.
 
falconview, good work. Once I have learned a few more of the basics, I will ask you explain some of the other strategies in dummy language I can understand.

Very interesting following the test trades I have in the TOS account. I have a combination of put and calll spreads just to follow how the numbers work.
100K in margin, collected 10K in credit at the beginning. When I l ook at the p/l numbers, does that mean if I closed all the positions I would add the profit to the credit collected?
Learning some of the ins and outs of how the system works. I am just using the web based system, are there big differences between the downloaded software version?

As far as autotrade, TOS will not do autotrade for Canadian residents. Does anyone know of an online brokerage that will allow Canadian autotrades?

Thanks Michael
 
Stanford

I use the web based version because I don't have enough bandwidth and speed on my internet service. The desk top sysgtem I don't know when? In the meantime, I'm using the time to also become comfortable with learning the new strategies.

So far I'm earning about $4000 to $5000 a month on a $100,000 account. I'm going for a no loss type trading if at all possible.

On the TOS account section, you should see your account balance, the wins get credited at expiration to your balance. On MONITOR also I believe in a one liner. You can look up your trade record, history and so forth.

I've been working this weekend on developing two papers for myself. One is titled STRATEGY EVALUATION and the other is the WEEKLY TRADING SCHEDULE.

I will be trading this way for another month at least I expect. I have instructions on how the different trades work. When and in what situation to apply them. This week I will be learning the simple BULL CALL spread, or the LONG PUT, which is the alternative depending on market direction. The long PUT if it occurs will go into my TOS account this week. The BULL CALL SPREAD will be experimental on scratch paper, as I have three selections of application to choose from and need to see how it works. I need something that profits in 7 or 8 OEX pts. No matter if it is a small profit, but it must profit fast and early. Then I need to see what my debit cost is.
Also going to be doing scratch paper trading some more on the SHORT STRADDLE and the SHORT STRANGLE. Need to build up my confidence level in these two, as I'm still not absolutely confident that my decision and application tree is right yet?
Made me a rule this week, that I will not trade an IRON CONDOR on anything over VIX 25. Last week I traded VIX 24.5 or so. It was close to scaring me.
I decided to do the BEAR CALL SPREAD in lieu of the straight CALLS buying. Various technical reasons for that. Will see how the experiments work out over the next few weeks.
After that, I'm going to get SERIOUS and eliminate a lot of these credit spread strategies as too expensive in margin money and risk. The risk to reward ratio is wacko!
When I start serious I want to start trading with between $5000 and $20,000 and you can't do that with these credit spread strategies. They don't earn enough on the small scale for the risk. What the final decision will be I don't know? But ultimately the starting account must be somewhere between $5000 and $20,000 start up. So whatever strategies fit that is the solution. These credit spreads to be meaninful productive profit wise, require $80,000 to a $100,000. Which is way to much RISK for a BEGINNER amateur like me in spread trading.
 
Stanford

Got to thinking what would be good training for this type of practical HARD KNOCKS UNIVERSITY, option derivative trading.

I was thinking back when I was a younger man around 64 or 65 years old. I took a three month, two night a week course at the local Community College learning C++ software programing. Drove the instructor nuts.

Anyway this is the same type of rationalization and thinking process needed as that software course. I remember the course as driving me nuts. On the other hand, I had increased my trades this past week and the mental strain was reminiscent of trying to do that C++ software homework. My mind was so engaged all week and at night, that I collapsed Saturday and Sunday this weekend and slept pretty much most of it all the way through. Little tv movie here and there and a bit of reading a novel. Mostly though I dozed and slept, recuperating from the week of mental turmoil. Who says brainwork isn't tiring?

Anyway you want to train for this type of trading, I certainly recommend a C++ software course first! ( grin! )
 
l only recently discovered this excellent thread started by the man himself, Phil, and hoped to see how an expert like Phil would of handled the extreme volatile period of October 08; l learned his style is to sell more call or put credit spreads if the market moves in a up or down direction respectively, well it certainly did move down and no doubt more bull put credit spreads would of been sold after the big fall of week Sept27th 08 to October 3rd 08, well the week following experienced another BIGGER fall, how did he deal with it / did this hurt his account badly?

The period when he was legging into iron condors / credit spreads was a time of mild market movements.

does anyone know if there were other educational threads around this period?
 
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