I highly doubt you will get filled at mid-point + $0.25 so I do not think you need to do the math. I would consider it great to just get the mid-point and even that is not something you can do consistently.
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Coach:
I've noticed that when you place a trade, you, more or less, commit a large amount each time (typically 50% or more of the margin you've set aside for credit spreads).
I typically commit maybe 10 to 20% at a time. My thinking is that if the market moves then the next credit spread or IC will be relative to what the current SPX price is.
At times this works well and at other times I've missed some real opportunities to get a good credit for an OTM spread that then goes even more OTM.
Of course this is hindsight is 20/20 and, of course, each of us has their own style.
My question is why you commit as much as you do at any given time and why you don't spread your entry points more in a manner similar to what I've mentioned above.
I've noticed that when you place a trade, you, more or less, commit a large amount each time (typically 50% or more of the margin you've set aside for credit spreads).
I typically commit maybe 10 to 20% at a time. My thinking is that if the market moves then the next credit spread or IC will be relative to what the current SPX price is.
At times this works well and at other times I've missed some real opportunities to get a good credit for an OTM spread that then goes even more OTM.
Of course this is hindsight is 20/20 and, of course, each of us has their own style.
My question is why you commit as much as you do at any given time and why you don't spread your entry points more in a manner similar to what I've mentioned above.
Coach:
I find myself often having to wade through all of these pages to find your current positions or to find a sort of 'boiler plate' answer that you have regarding adjustments, etc.
Is there a way to post files in this forum so that they can easily be found independent of a posting. Say a folder with word files like "General adjustment strategy", or "Coach's current positions". It would also save you time in answering the same questions over and over again, by simply entering the hyperlink to the file.
As I said, it is getting harder and harder to find prior answers and stuff so I was hoping their might be a central folder area for boiler plate, etc.
Thanks.
I find myself often having to wade through all of these pages to find your current positions or to find a sort of 'boiler plate' answer that you have regarding adjustments, etc.
Is there a way to post files in this forum so that they can easily be found independent of a posting. Say a folder with word files like "General adjustment strategy", or "Coach's current positions". It would also save you time in answering the same questions over and over again, by simply entering the hyperlink to the file.
As I said, it is getting harder and harder to find prior answers and stuff so I was hoping their might be a central folder area for boiler plate, etc.
Thanks.
I wish I was able to find the optimum time to enter each spread but I try and avoid market timing as much as possible. When I want to place a trade based on time to expiration and the strikes I simply commit my capital to the trade. If I try and place a little at a time guessing on price swings to get better fills I could either miss out on what was an already good premium or be forced to chase the market and go after strikes I am not comfortable with.
I expect the market to have price swings and I choose strikes which I feel will not be affected by those price swings. I would rather not try and place my spreads at what I think are good entries since I am more likely than not to mis-time those entries. I prefer to set and forget the positions.
What happens is that I feel if I try and get too cute with my timing, I will have more cash/margin on the sidelines doing nothing when I could have simply entered the spread and let theta and the index do its job.
I always have cash/margin in reserve so I can always add positions here and there when I want. For example, for December I still have a lot of margin available for more positions if the market presents the opportunity.
It is best summed up in your quote:
"At times this works well and at other times I've missed some real opportunities to get a good credit for an OTM spread that then goes even more OTM."
I would rather not play that guessing game and simply enter my positions at the strikes and time to expiration I like. I spend most of my daily energy in the S&P and Russell futures lol.
But I have to say take this all with a grain of salt because this is simply my approach, not necessarily THE right approach. If you would prefer to scale in to each expiration month and you find it works for you, then by all means you have to do what you feel most comfortable with.
I expect the market to have price swings and I choose strikes which I feel will not be affected by those price swings. I would rather not try and place my spreads at what I think are good entries since I am more likely than not to mis-time those entries. I prefer to set and forget the positions.
What happens is that I feel if I try and get too cute with my timing, I will have more cash/margin on the sidelines doing nothing when I could have simply entered the spread and let theta and the index do its job.
I always have cash/margin in reserve so I can always add positions here and there when I want. For example, for December I still have a lot of margin available for more positions if the market presents the opportunity.
It is best summed up in your quote:
"At times this works well and at other times I've missed some real opportunities to get a good credit for an OTM spread that then goes even more OTM."
I would rather not play that guessing game and simply enter my positions at the strikes and time to expiration I like. I spend most of my daily energy in the S&P and Russell futures lol.
But I have to say take this all with a grain of salt because this is simply my approach, not necessarily THE right approach. If you would prefer to scale in to each expiration month and you find it works for you, then by all means you have to do what you feel most comfortable with.
Yeah I can see some of the good nuggets can get buried. I think the best way is for me to simply reiterate all the general rules in a new post and then we can refine them based on different people's experiences here on the thread.
I too am probably too lazy to go digging for some of those descriptions so it may be easier to just re introduce some of the trading guidleines I developed.
Just put $1,000 in the slot at the top of the screen and punch in the code 1234 lol.
Give me some time to work in it
.
Phil
I too am probably too lazy to go digging for some of those descriptions so it may be easier to just re introduce some of the trading guidleines I developed.
Just put $1,000 in the slot at the top of the screen and punch in the code 1234 lol.
Give me some time to work in it
.Phil
Ahh now I understand lol. Well that is why I like Thinkorswim because I can find the actual bid/ask spreads on the floor by asking (which usually hover around the mid-point ToS shows) and determine what is the most likely fill price. I am not sure if volume helps you (i.e. 100 contracts v. 10) but ToS has been very forward in helping. SO if the midpoint is showing as $0.50 but they call the floor and find the actual b/a spread is $0.35/$0.50, you will not get filled with a limit order to sell at $.50. You will have a great chance at getting filled at $0.40 which is $0.10 off the mid-point.
What ToS told me is that the exact mid-point is what the MM price as fair value and you will usually not get filled at the point, you will get filled if you shave off of it. I have advocated anywhere from $0.10 to $0.25 depending on how wide the spread is which I know better with ToS' help at the trade desk.
What ToS told me is that the exact mid-point is what the MM price as fair value and you will usually not get filled at the point, you will get filled if you shave off of it. I have advocated anywhere from $0.10 to $0.25 depending on how wide the spread is which I know better with ToS' help at the trade desk.
ouch! oh well, live and learn.
That's interesting. Are you saying that the short weekly 1235 calls are not being treated as naked for margining but rather as part of a diagonal? Seems generous.
I suppose that although both weekly and monthly short calls can be ITM at the same time, they can't both be exercised at the same time due to European style exercise constraints. Hmm...still not sure how you aren't being treated as net naked for margining purposes, but why complain?
What did you end up doing? There was a little dip today IIRC, did you cover the short weeklies?
Momoney.
That's interesting. Are you saying that the short weekly 1235 calls are not being treated as naked for margining but rather as part of a diagonal? Seems generous.
I suppose that although both weekly and monthly short calls can be ITM at the same time, they can't both be exercised at the same time due to European style exercise constraints. Hmm...still not sure how you aren't being treated as net naked for margining purposes, but why complain?
What did you end up doing? There was a little dip today IIRC, did you cover the short weeklies?
Momoney.