SPX Credit Spread Trader

[El OchoCinco]

I was looking at the OTM SPX strikes and the OTM XEO strikes, and there seemed to be more credit outside of support areas when comparing both charts. The XEO and SPX have a very close correlation but the magnitude of the moves are of course different. Looking at low points of 555 on the XEO and low points on the SPX, I saw more credit on the XEO and decided to take it.

Later I saw some decent credit on the SPX and grabbed those as well.

I look at the charts for support areas and common moves and try and post the srpeads outside those ranges. Just seemed to have a better b/a on the XEO at that time. Of course with the last two days, all put spreads have nice b/a values lol.

Phil

Quote from andysmith:

"For OCT I am looking at OCT 540/550 Put Spreads and for SPX 1170/1180 Put Spreads."
-- Phil, what was the rationale behind looking at the XEO instead of focusing only on SPX?

 

[andysmith]

Phil,

Last two days have been great for put spreads. Of course, assumption here is that we're not at the start of a market plunge.

What SPX put spreads have you put on? I have some 1160/1170 @ 0.70 yesterday and am looking to add the same today.

1170/1180 will get you more than $1.00. Maybe I'll do just a few, but it's a bit close for comfort.

 

[rdemyan]

Got filled today on the following:

OCT SPX 1125/1140 bull put spread at $0.50.

 

[rdemyan]

Market's still going down. I'm finding it hard to resist going after more 1125/1140's or maybe even lower, but I'm at my limit of about 1/3rd of my portfolio in credit spreads

Quote from rdemyan:

Got filled today on the following:

OCT SPX 1125/1140 bull put spread at $0.50.

 

[rdemyan]

Phil:

I have some 1285/1300 bear call spreads that I initially got $0.80 credit for. I might be able to buy them back for around $0.15 and roll down. I'm thinking of the 1265/1280 bear call spread. Indications are I might get $0.65 to $0.70 for the roll down credit. The guys I follow had their fib target at 1263 on the upside but that was a couple of weeks ago when they thought the market would keep going up. So now that it's down, I might be safe going after the 1265/1280 bear call.

What do you think?

 

[ryank]

I have a 1270/1280 spread that I received $.90 credit for last week. I would like to close it for $.15-$.20 (it's getting close) then wait until after the hurricane hits before putting on another call spread.

ryan

Quote from rdemyan:

Phil:

I have some 1285/1300 bear call spreads that I initially got $0.80 credit for. I might be able to buy them back for around $0.15 and roll down. I'm thinking of the 1265/1280 bear call spread. Indications are I might get $0.65 to $0.70 for the roll down credit. The guys I follow had their fib target at 1263 on the upside but that was a couple of weeks ago when they thought the market would keep going up. So now that it's down, I might be safe going after the 1265/1280 bear call.

What do you think?

 

[ryank]

Actually, my spread is 1280/1290.

 

[El OchoCinco]

Sorry I missed the questions, was at the station doing the radio show and missed some great E-mini shorts @#$%.

There is nothing wrong with taking a profit and rolling down the put spreads if there is enough credit to make it worth while. Be careful rolling down to low because right now it seems we got a lot of hurricane selling. If RITA blows through easily and oil prices pull back we could be back to 1240 within a week. So roll down at your own risk. I still see 1245 as overhead resistance and 1265 is as close as I would recommend getting, 1275 much better. Better to be more conservative since we might be looking at an oversold scenario.

Phil

Quote from rdemyan:

Phil:

I have some 1285/1300 bear call spreads that I initially got $0.80 credit for. I might be able to buy them back for around $0.15 and roll down. I'm thinking of the 1265/1280 bear call spread. Indications are I might get $0.65 to $0.70 for the roll down credit. The guys I follow had their fib target at 1263 on the upside but that was a couple of weeks ago when they thought the market would keep going up. So now that it's down, I might be safe going after the 1265/1280 bear call.

What do you think?

 

[rdemyan]

I couldn't resist. Got the following order filled as well today.

Oct SPX 1125/1140 at $0.60

That's it until we get near October expiration except to possibly put on the bear call sides for an IC.

I hope going beyond my usual 33% of the portfolio for credit spreads doesn't come back to haunt me.

Quote from rdemyan:

Market's still going down. I'm finding it hard to resist going after more 1125/1140's or maybe even lower, but I'm at my limit of about 1/3rd of my portfolio in credit spreads

:eek:

 

[El OchoCinco]

It is not about hoping it does not come back to haunt you lol. You have to make sure it does not haunt you. If this much margin is making you nervous, then by all means go no further. YOu have your positions for OCT so simply let time decay do its thing and watch for support levels.

At 1140 there is a lot of downside room cushion before you would have to worry so plenty of time to adjust before taking any significant loss. There is support at 1200/1205 and at a few more levels before getting to 1140. If RITA blows through, oil should drop back and the market should stablize. Just set a fence of 1170 for follow-up moves.

Even if 1200 is broken, it is unlikely that we would fall to 1140 in the next 3 weeks. Just keep your eye on the market and follow along.

Phil

Quote from rdemyan:

I couldn't resist. Got the following order filled as well today.

Oct SPX 1125/1140 at $0.60

That's it until we get near October expiration except to possibly put on the bear call sides for an IC.

I hope going beyond my usual 33% of the portfolio for credit spreads doesn't come back to haunt me.


:eek: