SPX Credit Spread Trader

Murray:

Sorry in advance for a newbie question. When you place the diagonal call spread, do you look for increased volitility or decreased volitility as you do with the diagonal put spread.

Thanks.

Jim
Quote from Sailing:

Coach,

The Call Diagonal 1300/1325 is available for .30 debit also...

Nice fill... we too have that spread on for Aug/Sept.

:)
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Quote from Sailing:

We're in the 'waiting for another opportunity mode' right now. Two weekds ago, when the VIX dropped to 14, we placed AUG/SEPT diagonals and some 1325/1315c Credit spreads... reason for trade was seasonality and geopolitical conerns. When the VIX spiked on Tuesday... we grabbed some 1115p/1125p credit spreads to complete an Iron Condor.

Be patient.... cash is a great strategy. Nothing wrong with waiting.

M~
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Murray,

I have been looking at your diagonal spread for the last several days because of a better leverage compared to my 3-leg position. I seldomly trade from the volatility perspective. Do you have any good books recommended for diagonal spread?
 
Quote from RichardRimes:

I think you are right, although I don't see this Bear market as being as vicious as 2002 or other Bear's. If there is a "soft landing" with Ben not raising rates in August then possibly the bear could be finished.
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There is only one problem in thinking that the Fed halting rate hikes will propel the market higher: historically, the opposite has happened. Ned Davis Research did a study of all previous rate hike cycles and found the the stock market has peaked on average 2 months <i>prior</i> to the terminal rate hike and bottomed, on average, 10 months <i>after</i> the terminal rate hike an average of about 9% lower than the top. If the last rate hike was at the end of June, then the market peak in May would fit this scenario with the bottom coming sometime next spring!

My view is that this is the beginning of the next wave of the bear market that started in 2000. It could get really ugly if history is any guide (see 1929-1932 and 1968-1973 in the US markets for examples of large bear market rallies followed by crushing drops). Anyone who thinks "things are different now" is fooling themselves. Frankly, I hope this view is dead wrong because it has dire implications for the economy.

His shadow is looming however. I have been much more careful in putting on my Put credit spreads and more agressive in the Call credit spreads and keeping a lot of cash in reserve.
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That's been pretty much my strategy, but I'm not entering bull put spreads unless the market is very oversold and I don't enter them anywhere near the money.
 
Yikes! I hope your wrong as well! As a history major I believe that history never repeats itself in exactly the same way:) However it never hurts to be prepared:D
 
Coach,

Since my first credit spread, I have been reading books regarding put credit spread.

Because of the volatility skew, most books recommend selling high vol, and buying low vol using ratio spread. That means, they are selling a put, and buying more puts with a lower strike. It contradicts with what we are doing it. We are here selling put, and buying put with a lower strike.

Comments are welcome.
 
Greetings All,

I have been following this thread occasionally and this is my
first post. I had couple of question about brokers.

1. Regarding ThinkOrSwim, I saw it mentioned here that
they may give special commission rates. Wanted to know
what they are and how can one get them.

2. Does anyone have any experience with Tradestation
securities. I looked at their demo CD and their back-testing
engine appears attractive to me.

Thanks

Bader
 
Quote from Sailing:

Scoobie,

The past six months we placed these on ToS. Because the next months out are placed when the VIX is low... and at a Far-Out-of-The-Money strikes... it does take a bit of patience to fill. We like to choose strikes with multiples of 25... becasue that's where the large open interest occurs. That said.. we've been lucky to fill right around Mid... I think the key is the strike prices... just easier for MMs to fill you where there is demand.

We do enter as a spread!
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Thanks Murray,

Think I'll do the same with the SPX spreads by choosing strikes like 1225,1200 etc. Yet to do one yet and just want to make sure I do it right for my first diagonal. I think getting a bad fill when opening a diagonal could ruin the strategy somewhat. At least your method of letting the short expire whenever possible reduces the disadvatage.
 
Hi Bader:

I just answered this question on ToS a few days back. Here's the link:


http://www.elitetrader.com/vb/showthread.php?s=&postid=1134901&highlight=ToS#post1134901

Quote from baderl:

Greetings All,

I have been following this thread occasionally and this is my
first post. I had couple of question about brokers.

1. Regarding ThinkOrSwim, I saw it mentioned here that
they may give special commission rates. Wanted to know
what they are and how can one get them.

2. Does anyone have any experience with Tradestation
securities. I looked at their demo CD and their back-testing
engine appears attractive to me.

Thanks

Bader
More...
 
Hi Baderl and welcome,

Not sure about TOS, but at IB i get charged only 75 cents per contract if my trades are routed through SMART. That's pretty good by my books. If its not through SMART, then the comission is 1.65 per contract. But they have canx fees which i think TOS don't have, so I tend to leave my orders there as a day trade and let it expire if it doesnt get filled. That way there's no canx fees.
 
The call spread seems a little aggressive for you now that you're on the daddy track :)

Seriously, where do you see resistance for the SPX.

Thanks.

===========================================
UPDATE On the nice upmove I decided to add some call spreads for August but since I am not sure of the extent of the move higher, especially with a FED meeting in between now and expiration, I did not do the full amount to leg into a Condor. I have a Condor with a limp:

STO 150 AUG SPX 1310/1320 Put SPreads @ $0.55

Credit = $8,250

COMBINED CREDIT = $23,250

Return = ~8.4%
 
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