SPX Credit Spread Trader

Opra · Mar 17, 2006

This has got to be the longest thread on ET, which speaks of its quality.

I closed out the short leg 131 of SPY call bear spread for a nickle a few days ago (and thus, luckily dodged the run-up), or I would have been sitting on a hot pan.

But I noticed that today (as of now) SPX is up 1.60 whereas SPY is down 0.48.

Just wonder if somebody can explain this? Is it expiry related? If yes, how/why?

TIA

Opra

Cache Landing · Mar 17, 2006

Quote from Opra:

But I noticed that today (as of now) SPX is up 1.60 whereas SPY is down 0.48.

Just wonder if somebody can explain this? Is it expiry related? If yes, how/why?

TIA

Opra

Dividend [edit] notice the gap down this morning on the SPY chart Always know when dividends are coming when you initiate a position, they are a silent killer in options trading.

CashCache · Mar 17, 2006

Ryan,

I have the some position (1345/1355) that is looking a little vulnerable out there. Have you determined your line in the sand yet?

If the SPX closes above 1325 anytime soon, I will be looking to get out of the way...

-Cash

Quote from ryank:

I'd like to see a retracement to ease some pressure on my 1345/1355 call spread and allow me to get more premium for a put spread. Still looks like another up day today but it is quadruple witching so lots of weird things can happen.

ryan

Opra · Mar 17, 2006

Quote from Cache Landing:

Dividend [edit] notice the gap down this morning on the SPY chart Always know when dividends are coming when you initiate a position, they are a silent killer in options trading.

Thanks Cache. Where can I find out when SPY goes ex-div?

I guess if I had still been short SPY Mar 131 call yesterday, it could have been exercised. If not, would have been OK today?

El OchoCinco · Mar 17, 2006

Since you were OTM yesterday I doubt you would have been exercised, but getting out of a short in danger of going ITM is good risk management

RichardRimes · Mar 17, 2006

Quote from Synaptic:

Donna,

I believe you're short the APR 1335c right? I'm in the same position (if so) ... Today, mY Full stochastics chart looks like it has peaked (strong buy) and may be turning over for a run down. Let's hope so. I may need Coach's hedging advice on my Calls this month!

I was short MAR 1335...APR I'm short 1340...so just waiting and watching

piccon · Mar 17, 2006

The best way to remain sane is to calm down. There is nothing wrong with your 1345 Short. At the time you placed it, you didn't expect the market would run like crazy. That's the nature of trading: You win , You lose, You make mistake, You cry victory.

The market has to go up and down. Don't panic and wait for the market to correct itself.

If you keep worrying everytime the market makes a move, you won't have time to spend all the money you are going to make and your kids and family and strangers and Uncle Sam willl fight for all the money you have made and didn't have time to enjoy because of SPX movement.

I have 1340 and I am not panicing.

Enjoy life

Quote from CashCache:

Ryan,

I have the some position (1345/1355) that is looking a little vulnerable out there. Have you determined your line in the sand yet?

If the SPX closes above 1325 anytime soon, I will be looking to get out of the way...

-Cash

Cache Landing · Mar 17, 2006

Quote from optioncoach:

Since you were OTM yesterday I doubt you would have been exercised, but getting out of a short in danger of going ITM is good risk management

Actually, SPY reached almost 131.5 midday yesterday. I'm gutsy and that still would've scared me.

In regards to your question Opra, I got a few notices from TOS, but you can also find the info on the CBOE web site. For SPY ex-div is the third friday in MAR, JUN, SEP, DEC.

El OchoCinco · Mar 17, 2006

I just checked my PayPal account and did not see any deposits to the "Buy Call Hedges for April" Fund...... if you guys want to do this alone without the CoachPhil Contrarian Fund... well....

LOL

We may form a base here near 1300 for some time unless we get another catalyst so just be wary if we cross over 1320. Remember that any negative news or setback can push us back below 1300. Look back to 1200 late last year and how it danced around there.

ryank · Mar 17, 2006

Quote from CashCache:

Ryan,

I have the some position (1345/1355) that is looking a little vulnerable out there. Have you determined your line in the sand yet?

If the SPX closes above 1325 anytime soon, I will be looking to get out of the way...

-Cash

Normally I close or hedge at 15 away from the short but now that we have broken 1300 and aren't showing any test of it for support I'm concerned we are going to be going a good deal higher before expiration. Probably will be looking at doing someting around 1320-1325 if/when we get there. I keep toying with buying an ATM or slightly OTM call now and selling a higher call later for as close to even as I can (legging into a hedge I guess). With the market up just a tick today I will let theta do its thing over the weekend before making any moves. Gives me more time to think it over as well.

ryan