One more thing on books, seminars etc. It is one thing to have the knowledge and understanding.....(there are I'm sure many good books) , it is a whole other ball game in the practice of it. Nothing beats experience, trying and failure. The best advice I've read is to do options in very small trades until you are familiar and comfortable with the strategy you are working on so the losses cannot knock you out of the game.
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
I'm not coach, but I'm bored at the moment so I thought I would post my opinions for public scrutiny.
It has been my experience (as I heavily trade both individual stocks and indices) that an index such as SPX does not follow support/resistance like an individual stock does. This is probably due to the fact that one sector can overpower another. It is true that stocks can make sympathetic moves, but this is more common in indices. For example, the financial sector has a lot of influence and can pull or push the market more than another sector.
This makes forecasting an index much more difficult. This is why I would generally agree with Donna. When trading an index, one must have a feel for that index, and probabilities are key. Establishing entry and exit points on an index based on s/r is very hard. IMO overbought/oversold indicators are best for indices, but even still are more accurate for individual stocks.
coach is busy on wed's with his radio show......good points Cache!
Quote from Synaptic:
Thanks Cache .... I added the overbought oversold technical study to my OE Java Chart but I'm not sure I know what I'm looking at .... not sure I see any correlation between equity price and OB/OS position .... ??
I'm not familiar with OE charting services or what criteria they use to make the determination, but other than using an "overbought/oversold indicator", there are technical indicators that you can use to determine on your own whether an equity is overbought or oversold. Many people like to use stochastic oscillators, bollinger bands, relative strength index, etc...
Just remember that overbought/oversold determinations are VERY subjective. I use these mainly to determine when it might be a bad time to initiate a position rather than when it is a good time. In other words, I use it to eliminate a prospect rather than to find a prospect. I won't make a bullish play simply because a company appears oversold, but I will refrain from a bullish play if a company appears overbought. OB/OS indicators might suggest proper timing in entering/exiting positions. For example, the SPX looks to be on the overbought side right now. That's not to say that it would be a good bearish play, but that a bullish play would likely be benefited by a little patience before entering.
In regards to individual equities, my main criteria is horizontal S/R. Channels and trendlines are also subjective. Horizontal S/R that has been demonstrated several times is much less subjective. As mentioned before however, this S/R doesn't hold true as well with indices, and it becomes imperative when making plays on indices such as SPX to use criteria like coach's "double straddle" guideline.
I guess that is why we have a market, because we all have different opinions. I have actually found that the index falls mor ein line with supoprt and resistance lines and chart patterns than the average stock. The index moves slower than an individual stock so it is easier for most patterns to form over time and chart.
I do not pretend to assume there is a right answer since TA is an individual subjective view of the charts. But only for my own taste, I find it easier to develop support and resistance points on the index along with my own, as Donna would say, intuition and "feel" combined.
But that is really up to the individual so I do not disagree with you Cache, I simple do not agree for my own experience. So basically I am the Swiss.
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As for market analysis, tomorrow afternoon (THU) I will post a new current chart of SPX with my nail biting, better than watching Curling on CNBC analysis....
I do not pretend to assume there is a right answer since TA is an individual subjective view of the charts. But only for my own taste, I find it easier to develop support and resistance points on the index along with my own, as Donna would say, intuition and "feel" combined.
But that is really up to the individual so I do not disagree with you Cache, I simple do not agree for my own experience. So basically I am the Swiss.
.As for market analysis, tomorrow afternoon (THU) I will post a new current chart of SPX with my nail biting, better than watching Curling on CNBC analysis....
Quote from optioncoach:
I guess that is why we have a market, because we all have different opinions. I have actually found that the index falls mor ein line with supoprt and resistance lines and chart patterns than the average stock. The index moves slower than an individual stock so it is easier for most patterns to form over time and chart.
I do not pretend to assume there is a right answer since TA is an individual subjective view of the charts. But only for my own taste, I find it easier to develop support and resistance points on the index along with my own, as Donna would say, intuition and "feel" combined.
But that is really up to the individual so I do not disagree with you Cache, I simple do not agree for my own experience. So basically I am the Swiss.
As for market analysis, tomorrow afternoon (THU) I will post a new current chart of SPX with my nail biting, better than watching Curling on CNBC analysis....
I'm sure it has a lot to do with trading style and personality. I do agree with you 100% on the idea that the index moves more steadily. It is also nice not to have to worry about gaps. This is why I prefer to play OTM credit spreads on the index.
If you trust bullish/bearish trendlines (I only defend them to a limited extent), then the index is more reliable as there are fewer fakeout days and overreactions. But there is a plethora of news coming out each week. Any one of these news releases can cause an index to break through s/r.
I guess when it comes down to it, I do always consider what the "market" is doing when I make a play on an equity. I guess I'd better be able to predict the future on both huh? Better get this year's crystal ball. I've been saving up.
Until then, I'm not too proud to mooch a little bit off of your "intuition and feel". 
Hey...I'm beginning to LIKE Curling
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NBBO Quote 5.20 8.00
Direct Quote 6.50 7.70
New! Tighter Quotes
I was pricing a debit spread 1295- 1275 put debit spread and I got
the above Quotes. Does anybody know the difference between
Nbbo quotes and direct quotes? which one to use?
thanks
Labib Imtanes
Last Bid Ask
SPX 1,290.93 1,290.75 1,291.26
.SZPPS 19.5 18.9 20.5
.SZPPO 12.3 12.5 13.7
NBBO Quote 5.20 8.00
Direct Quote 6.50 7.70
New! Tighter Quotes
I was pricing a debit spread 1295- 1275 put debit spread and I got
the above Quotes. Does anybody know the difference between
Nbbo quotes and direct quotes? which one to use?
thanks
Labib Imtanes