SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Well we had a rising triagnle breakout and pullback to support, followed by bounce higher. We are still above the support line and therefore poised for sideways/higher movement. Fed meeting next week could be the catalyst for the continued move higher or breakdown through support. We will go pretty much no where until then. Monitor your positions if your calls are getting within arms reach, close if you have some nice profits so far.
When you are in a breakout phase with continued upside movement very likely and no specific resistance points to skeap of, then the upside risk becomes greater for calls. I do not see us really closing above 1335 in the next 2 weeks since a breakout higher from here will also have a pullback.
Do not fly to close to the sun here on the call side so just be careful and alert. No need to panic, just plan out some partial hedges, adjustment or follow up strategies now with no pressure and implement them if needed.
When you are in a breakout phase with continued upside movement very likely and no specific resistance points to skeap of, then the upside risk becomes greater for calls. I do not see us really closing above 1335 in the next 2 weeks since a breakout higher from here will also have a pullback.
Do not fly to close to the sun here on the call side so just be careful and alert. No need to panic, just plan out some partial hedges, adjustment or follow up strategies now with no pressure and implement them if needed.
I'm playing this one a little bit more aggressive, because I already had some plays that will hedge in the event of a big run.
On the jump this morning I got filled on 1340/1350 bear call. Then during the dip this afternoon I got filled on 1240/1250 bull put.
Ouch.... looks like they are ahead of the game, hope mine doesn't follow. Maybe you can google a similar service to see if that is blocked too. Good luck.
Quote from Cache Landing:
Finally got filled on my APR SPX orders.
In other news, I was all amped to see if gotomypc.com would allow me to access ToS platform from my work office. Total let down when I found out that the corp that I work for has a block on the site.
Basically I take a quick look at XSP to get a good idea of what I could get if I traded it instead of SPX. In my experience I can almost always get filled at the mid with both XSP and SPY. This gives me a good idea of what the MMs will be willing to give up. I actually like to base my r/r analysis on the XSP mid. Then I take advantage of better increments on SPX to squeeze a little bit more premium then I could have gotten with XSP.
For example, XSP 134/135 mid was 0.10 today (same as SPX 1340/1350 @ 1.00). My r/r strategy is then based on $1.00 premium and getting filled at $1.15 is just a bonus.
It's what comes with a huge corp. A large IT department with enough resources to stay ahead of the game.
Are you saying you are getting filled on the sale of a spread above the mid-point? Maybe I misunderstood...
No. The mid on the SPX is always higher than the equivalent mid on XSP. But (expecially the last 4 weeks before expiry) the SPX mids jump around a lot. So when doing a r/r analysis it becomes very difficult to determine what you might get filled at. For example yesterday I had a spread limit order that was 0.25 under the mid at one point because the bid/ask was moving all over the place but still no fill.
So when I am doing a r/r analysis, rather than using the SPX mid, I will use the XSP mid (multiplied by 10) which I could almost definitely get filled at. Of course SPX has the advantage of better increments (XSP has 0.05 increments, equivalent to 0.50 increments on SPX) and lower commissions.
Yesterday, when I had an order that was 0.25 under the SPX mid. The XSP equivalent mid was still another 0.10 under that, which was suggesting to me that the SPX mid might be a bit high. If I based my r/r on that mid I would be sorely disappointed when I couldn't get filled until I had given up 0.35. Using the XSP mid ( X 10) which is much more stable allows me to get a feel for what kind of fill I would get immediately. If that is what my r/r is based on, then anything above that number is more than I had anticipated.
[edit] I should have said that the SPX mid is generally higher than the equivalent spread on XSP. Another example was today. I was setting up a put spread order and getting quoted that the mid was 0.40. I looked at equivalent XSP spread and was quoted the equivalent of 0.50 so I entered the SPX order at 0.55 and was filled within a few minutes. Had I entered the order at the original quote I would have given up 0.15 while during that time the underlying didn't really move at all.
Of course this couldn't be done with your style of trading because you are getting filled at 0.35 credits. At those strikes there is no spread on XSP.
This is an interesting strategy for setting credits. I've been having trouble getting filled on SPX APR bull puts and, as you say, the mid has just been jumping around.
I'm gonna start using this idea to see if it helps. When I post a filled order, I'll try to remember to include where the XSP mid was when I placed my order.
Thanks for sharing that strategy.
I'm gonna start using this idea to see if it helps. When I post a filled order, I'll try to remember to include where the XSP mid was when I placed my order.
Thanks for sharing that strategy.