SPX Credit Spread Trader

[rallymode]

Quote from piccon:

Rally technique is pretty good but I don't have the balls to be that close of the money.

You got it all wrong, if i had the balls i'd be trading FOTM where the risk is greater in my book.

It all depends on a trader's personality and tolerance for risk. Since this is my conservative account and it holds my retirement money, i am not taking big risks or looking for big rewards. 10-20% annually is my goal. It sure beats the hell out of bonds. Just because my spreads are closer to the current price doesnt mean they are riskier. EDIT. In fact, the biggest drawdown i've seen for the past 15 months is 2% and my strikes have been hit 6-7 times if i am not mistaken.

 

[rdemyan]

This is your conservative account!!

But seriously, wouldn't you say your strategy requires you to monitor your positions more than if you were FOTM. Can I ask: are you a full-time trader or do you have a regular day job as well.

Quote from rallymode:

You got it all wrong, if i had the balls i'd be trading FOTM where the risk is greater in my book.

It all depends on a trader's personality and tolerance for risk. Since this is my conservative account and it holds my retirement money, i am not taking big risks or looking for big rewards. 10-20% annually is my goal. It sure beats the hell out of bonds. Just because my spreads are closer to the current price doesnt mean they are riskier.

 

[rallymode]

Quote from rdemyan:



But seriously, wouldn't you say your strategy requires you to monitor your positions more than if you were FOTM. Can I ask: are you a full-time trader or do you have a regular day job as well.

I have a job that allows me access to the internet 9-5, so i guess its BOTH.

Actually, daily monitoring isnt all that prudent. I start looking for adjustments when my short strike is hit. Ideally when the long strike is hit since i can go higher and also take advantage of the gamma curvature like riskarb likes to say

If i miss the day my strikes are hit and market shoots for the moon then thats just a better entry for the second spread, if it falls then i treat it like the strike wasnt hit. Now, there's alot more to it but i will explain when we get to it in the future. Again, it's all about the position sizing and not so much the strikes, if i could get a $1.5-1.7 credit 50 points OTM i'd do that instead

 

[rdemyan]

Okay, and I hate to say this but I guess I look forward to watching you adjust one of your trades (sorry)

"A better entry for the second spread". Yeah, but it will cost you a fortune to get out of the first spread. So I would think the net debit would be ugly, unless you're planning to increase the number of positions in order to maintain a net overall credit at whatever level you deem appropriate.

Quote from rallymode:

I have a job that allows me access to the internet 9-5, so i guess its BOTH.

Actually, daily monitoring isnt all that prudent. I start looking for adjustments when my short strike is hit. Ideally when the long strike is hit since i can go higher and also take advantage of the gamma curvature like riskarb likes to say

If i miss the day my strikes are hit and market shoots for the moon then thats just a better entry for the second spread, if it falls then i treat it like the strike wasnt hit. Now, there's alot more to it but i will explain when we get to it in the future. Again, it's all about the position sizing and not so much the strikes, if i could get a $1.5-1.7 credit 50 points OTM i'd do that instead

 

[rallymode]

Quote from rdemyan:



"A better entry for the second spread". Yeah, but it will cost you a fortune to get out of the first spread. So I would think the net debit would be ugly, unless you're planning to increase the number of positions in order to maintain a net overall credit at whatever level you deem appropriate.

Yes i increase the size to compensate but the initial loss isnt all that ugly like you put it, don't forget its only a 5 point spread. Usually if there's enough time to expiration(10-15 days) and the market is at the long strike my loss is only about $1.5-$2 because i am at the peak of the gamma curvature on my long side.

 

[qamhwr]

There is no doubt that you are the LEG person.

George

Quote from DonnaV:

ok...I've had good success legging into the put side. I've only tried legging into the call side once (last oct when we were really oversold). I have been left with legs dangling but if you are comfortable with that......

 

[rallymode]

Quote from momoneythansens:

An antagonistic man (clearly not me ) might comment thus:

...where we might go...past price action...will I be correct? Who knows...

Sounds reliable enough to bet on then!

...certainly gives you a small edge...an additional layer of protection

Certainly huh? Would you concede that a false sense of security might be more dangerous than no sense of security? Reasons why or how are not difficult to imagine.

Examples of flying too close to the sun based on TA are documented on these pages.


A less antagonistic man, like me for example, might comment thus:

I personally don't bow down at the altar in the church of TA as I believe her to be a false idol.

However, I am tolerant of all kinds of faiths and religions so I keep an open mind.

Well done on those results

MoMoney.

LOL no comment since this isnt the "TA - myth or law in trading" thread but who cares if something is true or false, if it works for me then i use it.

 

[rallymode]

Quote from piccon:



Total April gain=$4480

April return on margin (ROM): 7.12%

Year to date return on investment (ROI):18.5%

Congrats on the great run. I also think that you should take coach's advice to heart. I followed your posts 1 week before expiration and my heart skipped a beat when i saw your exposure. I would add one more thing though. I wouldnt just refrain from increasing your position sizes over the next months but i would actually be reducing them especially on the put side.

Just my 2 cents.

 

[andysmith]

Rally -- if you're only going to hold for a week, why use a slow-moving spread? Why not buy some SPY puts?

Quote from rallymode:

Yes i did, but the june spread won't appreciate as much as the may one if the underlying moves the way i expect it to move. Theta decay is of no concern to me since i won't hold this more than 5-7 days.

 

[andysmith]

I'm guessng he monitors his trades less than the FOTM folks -- that's the whole idea, small positions, better risk/reward, less monitoring.

Quote from rdemyan:

This is your conservative account!!

But seriously, wouldn't you say your strategy requires you to monitor your positions more than if you were FOTM. Can I ask: are you a full-time trader or do you have a regular day job as well.