SPX Credit Spread Trader

Quote from rdemyan:

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

Oct SPX 1125/1140 at $0.60
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I've been following along with this journal for a few months and papertrading a few positions to get a feel for it. I opened my first real position today. I did this same position as you but managed to get $0.65 right at the close after opening it an hour and a half before market close. I would like to say it was my patience that helped with that, but I was actually away from the computer. :)

Looking forward to seeing how our positions play out.
 
Phil,

Can you please offer some insight into:

1) what you do with the other 50% of your funds (I think you said you only write spreads on 50% of the total account)?

2) What you do with the margin for the spreads? I recall you might have mentioned that you put them in t-bills? How does that work? What if you need some cash to make adjustments?
 
Coach, I have a 1280/1290 entered last week for a 1.15 credit. With the market down I want to grab profits and am looking at current prices and considering several scenarios:

1. Leg out at current prices for a debit of .35

2 Buy back the spread. Midpoint is .20 so I would have to add .05 or .10 to get filled?

3. Buy back the short leg for a debit of .50 and hold the 1290 for a rebound and sell later for more profits. If the market keeps drifting lower this may not be a good option.

It seems any of these results in a nice profit, but I wonder how you would handle this?
 
The strategy Phil coaches on this board is a rather sophisticated way of trading -- maybe not for the floor trader, but certainly for the part-time retail investors (like me).

I'm curious about the experience and age group of the readers/practitioners on this board. I wonder if any of you might be able to share the following info (I'm b and d):

AGE
a) 20-30
b) 30-40
c) 40-50
d) 50-60
e) 60-70

YEARS OF INVESTING EXPERIENCE (any type)
a) less than 2
b) 2 to 5
c) 5 to 10
d) 10 to 20
e) over 20
 
B and B here.

EDIT: Hey you changed the categories! :p I am B and C in your new setup.

Also, I am not a full time trader. Another advantage of this strategy is that it doesn't require full time monitoring.
 
Well, you're no longer a 'virgin' :)

I had limit orders for$0.70 near the end, then $0.65 for quite a while and then finally $0.60. Whose your broker? Mine is OptionsExpress.





Quote from Agyar:

I've been following along with this journal for a few months and papertrading a few positions to get a feel for it. I opened my first real position today. I did this same position as you but managed to get $0.65 right at the close after opening it an hour and a half before market close. I would like to say it was my patience that helped with that, but I was actually away from the computer. :)

Looking forward to seeing how our positions play out.
More...
:)
 
More than 50% of my portfolio is in diversified closed-end funds paying on average about 6% yield. They provide monthly dividends and net capital appreciation which helps boost my returns and provide monthly income as well. I slowly move profits into more funds over time. The rest are either in t-bills or in cash depending on how much margin I want available.

I do not put the margin in anything. It works the other way around. The required margin, which is really a set aside is already in the closed-end funds, t-bills or cash. I can sell spreads against that without doing anything more. You do not have to place the margin amount in something to trade it. Better to already have it invested somewhere earning a return and then sell spreads against a portion of it. Brokers will allow you to margin 100% of the cash amount, 90/95% of the t-bill amount and 50% of the stock amount (i.e. closed-end funds). So my investments were already in closed-end funds and cash before I started selling the spreads.

I always keep a portion in cash for flexibility. I do not look at it as idle cash since I am selling spreads against it and earning a return on it.

Phil

Quote from andysmith:

Phil,

Can you please offer some insight into:

1) what you do with the other 50% of your funds (I think you said you only write spreads on 50% of the total account)?

2) What you do with the margin for the spreads? I recall you might have mentioned that you put them in t-bills? How does that work? What if you need some cash to make adjustments?
More...
 
Quote from rdemyan:

Well, you're no longer a 'virgin' :)

I had limit orders for$0.70 near the end, then $0.65 for quite a while and then finally $0.60. Whose your broker? Mine is OptionsExpress.
More...

The account this position is in is also at OptionsXpress. I will be transferring another account to Think or Swim soon, I believe, to give them a try. I have heard good things.
 
I got a little lost following the path but the quick answer for me is to never leg out. Perhaps if the spread shrinks significantly you can take off the short leg for a profit and just leave the long leg for lower commissions and let it expire. If the market reverses I doubt it will gain value but you can leave it like a lottery ticket if the market really surges.

But I would avoid legging if possible unless you feel comfortable trying to time the exits and re-entrys.

Phil

Quote from Hart9000:

Coach, I have a 1280/1290 entered last week for a 1.15 credit. With the market down I want to grab profits and am looking at current prices and considering several scenarios:

1. Leg out at current prices for a debit of .35

2 Buy back the spread. Midpoint is .20 so I would have to add .05 or .10 to get filled?

3. Buy back the short leg for a debit of .50 and hold the 1290 for a rebound and sell later for more profits. If the market keeps drifting lower this may not be a good option.

It seems any of these results in a nice profit, but I wonder how you would handle this?
More...
 
You can put me down for b and d also.

ryan



Quote from andysmith:

The strategy Phil coaches on this board is a rather sophisticated way of trading -- maybe not for the floor trader, but certainly for the part-time retail investors (like me).

I'm curious about the experience and age group of the readers/practitioners on this board. I wonder if any of you might be able to share the following info (I'm b and d):

AGE
a) 20-30
b) 30-40
c) 40-50
d) 50-60
e) 60-70

YEARS OF INVESTING EXPERIENCE (any type)
a) less than 2
b) 2 to 5
c) 5 to 10
d) 10 to 20
e) over 20
More...
 
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