SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
and to you as well for updating it 
June Autopsy..err .....ummm ANALYSIS (or Saturday AM quarterbacking
)....
One of the reasons I've not "blown out" so to speak this past year has been very carefully reading many posts from both the success side and failure side. In that spirit I want to share the outcome of my June trade for other "newbys" as well as the rubberneckers checking out June disasters:eek:
I hadn't planned on even doing a CS on the spx this month knowing in advance we would be on vacation...however on May 10th with CNBC Mark Haines yammering in my year..."We're 50...40...30 pts from a top..blah blah blah" I said if there was ever the perfect fade this is it
(also the 10 day oscillators and other charts did show a pretty solid top)....so I bought June 1250 puts for 2.6 and 1245 puts for 2.5.
Market as predicted started tanking but rather than just waiting and perhaps using a trailing stop I decided to trade my way into a vertical and over the next few weeks ended up with a 1225/1245 put CS for a credit of 4.80. It was never a WOTM spread and wasn't meant to be as I felt the amount of the credit received was good enough to at least not have to close for a loss.
This analysis held until the last week of trading when SPX dove down very rapidly thru even my long strike... and I'm on vacation. I had decided prior to leaving if worse came to worse I would do a vertical roll to July for hopefully BE. The advise was to wait until expiration day to do this to squeeze all the time premium out of the spread. On tuesday however when my long strike of 1225 had been touched I was concerned that I wouldn't get enough of a credit for the June 1225 so I put in an order which didn't get filled on Tues for less than the credit and again on Wed AM. By Wed afternoon I called down and got a bid of 5.50/6.5 and decided to roll for $6(debt) which went thru.
At his point I honestly felt I had done the best I could with the trade. It wasn't until Thurs AM that I realized had I waited I could only do worse if the market had gone down severely on Thurs. If it went up I could roll or close for BE or better and if the market was flat then the 1225 would still have had enough value to get pretty close to the $6 debt I had already paid. I understood that the R/R was better closing on the last day rather than a day or two before expiration. Of course I'm still not out of the woods as now I have a July 1225/1245 CS for a debt of 1.2. Its obviously risky to roll out a CS to the next month however in some situations you may need to. To close it on Wednesday it would have cost $15..a big pile of money.
While this is not a blow up it still feels like one. I'm pretty confident I can trade my way into a positive July but while the rubberneckers may disagree I still don't feel it was a horribly managed trade with the exception of the end game (which of course IS the most important part). If it happens again...vacation or no vacation...crappy computer or none, I'll be sitting on the phone with my guys at TOS looking for the best exit I can get on THURSDAY!
The other big lesson...buy a new laptop....
)....One of the reasons I've not "blown out" so to speak this past year has been very carefully reading many posts from both the success side and failure side. In that spirit I want to share the outcome of my June trade for other "newbys" as well as the rubberneckers checking out June disasters:eek:
I hadn't planned on even doing a CS on the spx this month knowing in advance we would be on vacation...however on May 10th with CNBC Mark Haines yammering in my year..."We're 50...40...30 pts from a top..blah blah blah" I said if there was ever the perfect fade this is it
(also the 10 day oscillators and other charts did show a pretty solid top)....so I bought June 1250 puts for 2.6 and 1245 puts for 2.5.Market as predicted started tanking but rather than just waiting and perhaps using a trailing stop I decided to trade my way into a vertical and over the next few weeks ended up with a 1225/1245 put CS for a credit of 4.80. It was never a WOTM spread and wasn't meant to be as I felt the amount of the credit received was good enough to at least not have to close for a loss.
This analysis held until the last week of trading when SPX dove down very rapidly thru even my long strike... and I'm on vacation. I had decided prior to leaving if worse came to worse I would do a vertical roll to July for hopefully BE. The advise was to wait until expiration day to do this to squeeze all the time premium out of the spread. On tuesday however when my long strike of 1225 had been touched I was concerned that I wouldn't get enough of a credit for the June 1225 so I put in an order which didn't get filled on Tues for less than the credit and again on Wed AM. By Wed afternoon I called down and got a bid of 5.50/6.5 and decided to roll for $6(debt) which went thru.
At his point I honestly felt I had done the best I could with the trade. It wasn't until Thurs AM that I realized had I waited I could only do worse if the market had gone down severely on Thurs. If it went up I could roll or close for BE or better and if the market was flat then the 1225 would still have had enough value to get pretty close to the $6 debt I had already paid. I understood that the R/R was better closing on the last day rather than a day or two before expiration. Of course I'm still not out of the woods as now I have a July 1225/1245 CS for a debt of 1.2. Its obviously risky to roll out a CS to the next month however in some situations you may need to. To close it on Wednesday it would have cost $15..a big pile of money.
While this is not a blow up it still feels like one. I'm pretty confident I can trade my way into a positive July but while the rubberneckers may disagree I still don't feel it was a horribly managed trade with the exception of the end game (which of course IS the most important part
). If it happens again...vacation or no vacation...crappy computer or none, I'll be sitting on the phone with my guys at TOS looking for the best exit I can get on THURSDAY!The other big lesson...buy a new laptop....
I'm not sure what blotter Cobalt posted, but if what was posted led you to believe that I was short a ton of naked at the money puts for the last quarter, then what wasnt posted was my short es futures position which i had gotten short between 1600-3600 of at an average of around 1326 (the variance between the 1600-3600 reflects my scalping out the futures at different times during the pullback)
Anyway, good luck to all you guys out there; if you work hard, and have a well thought out plan, and stick to it , and catch a break or two, and keep selling premium as part of your strategy, you can get lucky like the Tiv and make it pretty big in this casino. But remember to give a lot of it away, as we are all a few bad clicks away from working at Burger King. So maybe its my humble beginnings that make me seek outside validation from time to time, and make me realize its all a blessing from G-d. Baruch Hashem.
Anyway, good luck to all you guys out there; if you work hard, and have a well thought out plan, and stick to it , and catch a break or two, and keep selling premium as part of your strategy, you can get lucky like the Tiv and make it pretty big in this casino. But remember to give a lot of it away, as we are all a few bad clicks away from working at Burger King. So maybe its my humble beginnings that make me seek outside validation from time to time, and make me realize its all a blessing from G-d. Baruch Hashem.
Good luck A, you know I'm rooting for you!
It's difficult not to second guess one's decisions, especially after you see a move like Thursday's. Coulda Woulda Shoulda, hindsight is 20/20 etc.
Fingers crossed. You have the skills to turn this around.
It's difficult not to second guess one's decisions, especially after you see a move like Thursday's. Coulda Woulda Shoulda, hindsight is 20/20 etc.
Fingers crossed. You have the skills to turn this around.
Quote from Aardvark:
June Autopsy..err .....ummm ANALYSIS (or Saturday AM quarterbacking
Assuming that we are speaking of the ES on the CME exchange:
The ES is half of a CME SP futures contract. SP is $25 for 10 points.
So you multiply the quote by $1.25
See http://www.alaron.com/traders_tools/contract_specs.htm
Sorry but even the site you linked to shows ES is $0.50 a point...
Commodity Contract//Contract Size// Initial Margin// Maint. Margin// Spread Margin// Trading Hour - CST// Point Value// Tick Fluctuation
Indexes
E-mini S&P**// 50 x S&P 500// 3,938 // 3,150 // 50 // 3:45-3:15 //1 PT = $0.50// 25 PT = $12.50
X-Trader simply had a display error for my ES option positions. Sheets confirmed profits at $1,125
Commodity Contract//Contract Size// Initial Margin// Maint. Margin// Spread Margin// Trading Hour - CST// Point Value// Tick Fluctuation
Indexes
E-mini S&P**// 50 x S&P 500// 3,938 // 3,150 // 50 // 3:45-3:15 //1 PT = $0.50// 25 PT = $12.50
X-Trader simply had a display error for my ES option positions. Sheets confirmed profits at $1,125
Me no, but my wife is due in a week, around the 26th....