SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
I am looking into archiving the shows this week so the next show will most likely be archived by me somewhere for those that are interested.
And no day job should come in the way of internet surfing! lol just kidding. Many people let me know they may not be able to tune in at that time and I am gonna make the shows available.
phil
And no day job should come in the way of internet surfing! lol just kidding. Many people let me know they may not be able to tune in at that time and I am gonna make the shows available.
phil
Coach,
I am still trying to understand the possible risk management choices available for your current SEP 1250/1260 bear call spread if the SPX continues to go higher? I too am hoping 1245 holds, but if not...?
What would you do in the following scenarios?
- SPX is at 1243 on 9/12?
- SPX is at 1246 on 9/14?
- SPX is at 1249.5 on 9/15 (at close)
I really appreciate the help you provide.
-Gary
I am still trying to understand the possible risk management choices available for your current SEP 1250/1260 bear call spread if the SPX continues to go higher? I too am hoping 1245 holds, but if not...?
What would you do in the following scenarios?
- SPX is at 1243 on 9/12?
- SPX is at 1246 on 9/14?
- SPX is at 1249.5 on 9/15 (at close)
I really appreciate the help you provide.
-Gary
Optioncoach
Thanks for your reply. It is nice of you that you answer all the querries.
I would like to try credit spread. Have you considered any other instrument other than spx. I would like to try something with lower value per point. I was thinking of YM. Your comments much appreciated. I also noticed that DAX has good volume and it is only euro 5 per point. Any other suggestions?
Thanks
Thanks for your reply. It is nice of you that you answer all the querries.
I would like to try credit spread. Have you considered any other instrument other than spx. I would like to try something with lower value per point. I was thinking of YM. Your comments much appreciated. I also noticed that DAX has good volume and it is only euro 5 per point. Any other suggestions?
Thanks
I knew the SPX was going to tease me! Time decay is really kicking in and (for the moment) it looks like a down start to the market today. I think I'll still hang on and not do any adjustments to my 1250/1260 bear call spread just yet. If I do get the opportunity to get out at a small profit today I may just take it.
ryan
ryan
I put in an order yesterday thru OX for a 1260/1270 spread - 10 contracts @ a credit of .45
There is no place on the order screen for an all or nothing order, well I was filled for 2 contracts, which will barely cover the commissions.
Question - Is there anyway (other than phone call) to express it's an all or nothing order?
Thanks
Hootie
There is no place on the order screen for an all or nothing order, well I was filled for 2 contracts, which will barely cover the commissions.
Question - Is there anyway (other than phone call) to express it's an all or nothing order?
Thanks
Hootie
The problem with answering your question is that it all depends on the individual for risk management and my resources, background and skill are unique to me and this has a direct effect on how I manage my risk.
I am advanced in this strategy and therefore take on slightly more risks than other people would. let me explain what I mean. In my opinion, 1245 is some serious overhead resistance. Therefore, I have decided that with a week to expiration I am not going to do anything at all unless SPX breaks through 1245. We had two strong up days in a row on not stellar volume and a down day was coming which would really kick time decay into effect. Today I have my downday, so far and the 1250/1260 spread narrowed by a large amount. So my approach to this position right now is to do nothing and let time decay do its job.
The reason I chose 1250 is because it was outside the resistance area. Also I have 2 large ICs on so even if I have to take a small loss on this spread to get out, I can still have an overall net profit.
Many people may not be able to follow the same risk management plan and therefore it is good to have rules such as thinking about adjusting at 10 or 15 points out away from the short strike. So an adjustment for the 1250/1260 would be a possibility if the SPX was at 1235 or 1240. Well the index was at 1235 and some people may have rolled the spread higher. Others may have used 1240 as a warning sign and did nothing and are happy about the nice down day so far.
To answer you questions about what I would do at certain index values, my personal opinion is that I will do nothing unless SPX is at 1245 or above. So on 9/12 if SPX were at 1243 I would be inclined to do nothing. Only reaons I might take action is if the technicals are pointing to strong bullish buying on high volume indicating continued upward movement. In that case I would get out if there was any profit at all (with time decay it is quite possible), roll up higher 10 points for more cushion or if the roll up is not possible because the further OTM strikes have decayed too much, then close for small loss and make my profits on the put sides.
1246 on the day before expiration would also depend on what I am seeing in the market. Since it is above 1245, I may be more inclined to take my profit given time premium should be almost gone. Rolling up might not work with so little time left so I either take a profit or small loss.
If on expiration day, the SPX is floating right near the short strike, then before the close of the market I get out no matter what. I do not want a strong opening the next day to cause settlement prices to be higher and lead to a loss. Unless I am a few points OTM minimum, I would get out 30 minutes or so before close to give me time to try and get a good fill.
There is no easy answer. My capital resources and approach may allow me to stay in a position longer than others would. Many people may have adjusted when the market surged to 1236 or so and I applaud them for sticking with their risk management plans even if the market moved back lower today. the market will not always cooperate so it is better to stick with the plan. Those who used 10 points as the warning point are still in their positions and have an even bigger cushion right now.
Phil
I am advanced in this strategy and therefore take on slightly more risks than other people would. let me explain what I mean. In my opinion, 1245 is some serious overhead resistance. Therefore, I have decided that with a week to expiration I am not going to do anything at all unless SPX breaks through 1245. We had two strong up days in a row on not stellar volume and a down day was coming which would really kick time decay into effect. Today I have my downday, so far and the 1250/1260 spread narrowed by a large amount. So my approach to this position right now is to do nothing and let time decay do its job.
The reason I chose 1250 is because it was outside the resistance area. Also I have 2 large ICs on so even if I have to take a small loss on this spread to get out, I can still have an overall net profit.
Many people may not be able to follow the same risk management plan and therefore it is good to have rules such as thinking about adjusting at 10 or 15 points out away from the short strike. So an adjustment for the 1250/1260 would be a possibility if the SPX was at 1235 or 1240. Well the index was at 1235 and some people may have rolled the spread higher. Others may have used 1240 as a warning sign and did nothing and are happy about the nice down day so far.
To answer you questions about what I would do at certain index values, my personal opinion is that I will do nothing unless SPX is at 1245 or above. So on 9/12 if SPX were at 1243 I would be inclined to do nothing. Only reaons I might take action is if the technicals are pointing to strong bullish buying on high volume indicating continued upward movement. In that case I would get out if there was any profit at all (with time decay it is quite possible), roll up higher 10 points for more cushion or if the roll up is not possible because the further OTM strikes have decayed too much, then close for small loss and make my profits on the put sides.
1246 on the day before expiration would also depend on what I am seeing in the market. Since it is above 1245, I may be more inclined to take my profit given time premium should be almost gone. Rolling up might not work with so little time left so I either take a profit or small loss.
If on expiration day, the SPX is floating right near the short strike, then before the close of the market I get out no matter what. I do not want a strong opening the next day to cause settlement prices to be higher and lead to a loss. Unless I am a few points OTM minimum, I would get out 30 minutes or so before close to give me time to try and get a good fill.
There is no easy answer. My capital resources and approach may allow me to stay in a position longer than others would. Many people may have adjusted when the market surged to 1236 or so and I applaud them for sticking with their risk management plans even if the market moved back lower today. the market will not always cooperate so it is better to stick with the plan. Those who used 10 points as the warning point are still in their positions and have an even bigger cushion right now.
Phil
My mian instrument right now is the SPX. It moves like a dinosaur at times and easy for me to follow. Also there are so many insturments trading it I like all the choices: SPX, SPY, E-mini futures, options on E-minis etc..
After that I do keep tabs on the OEX. SPX and OEX are among the largest and most liquid indexes which is what I like when doing this strategy.
phil
After that I do keep tabs on the OEX. SPX and OEX are among the largest and most liquid indexes which is what I like when doing this strategy.
phil
Ryan:
With 1245 as strong overhead resistance I also did not take any action with my 1250/1260 spreads. I expect that those levles will not be reached this week at all. On Monday, we will see what is in store for the week. Do not forget that when the market hits 1245 all those tecnical traders will come in and short the market and help us out lol
.
If the index is close to your short strike and you have a small profit, nothing wrong with just taking that profit and removing all worry and risk completely.
Phil
With 1245 as strong overhead resistance I also did not take any action with my 1250/1260 spreads. I expect that those levles will not be reached this week at all. On Monday, we will see what is in store for the week. Do not forget that when the market hits 1245 all those tecnical traders will come in and short the market and help us out lol
.If the index is close to your short strike and you have a small profit, nothing wrong with just taking that profit and removing all worry and risk completely.
Phil