SPX Credit Spread Trader

Quote from rdemyan:

Mark:

I recently opened an account with IB which I have not yet funded.

Just out of curiousity, what is the customer support like? Can I call them to help me get a trade filled, like I can with ToS?
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The word on the street is that IB has very poor customer service. I've had mediocre success with them. They help with some issues, but not with others.

I have had some success calling thm and getting an order filled, but sometimes you wait on hold, just to get through to them.

The whole basis of their system - and the reason they charges so little in commissions - is that they work electronically. They are not set up to provide live trading help. But, as I said, if you do get through right away, they will make the effort to provide help.

Mark
 
Quote from momoneythansens:

From a roll perspective, if you had a CALL diagonal you would have a better chance of being able to play at least one side of the market.

With your PUT diagonal, it's very possible you could end up being left with a long leg that quietly fades away into nothingness next month!

Its now just a directional play. Might close and take my loss, leave it and play for downward movement, or turn it into a credit spread by selling a SEP higher strike PUT.


It's prudent to keep an eye on your front month short leg to see how much hedging potential it has. Once it drops below a certain amount, adjust into a position that provides more hedging power e.g. roll.

Yes will have to keep a closer eye on that next time. So Im assuming you're saying keep the Long PUT in place and adjust only the front month Short Put. eg buy back the cheap front month and sell one higher up to maintain Delta neutralness. Gotcha.

I knew my PUT diag would be in trouble as the market kept heading up but I just kept it to see how the position behaves with real money. Very small learning position. My lesson learned? Don't keep the position if underlying moves too far away from diagonal, especially closer to expiration

As with a butterfly, if you are anywhere near the sweet spot in the last 5 trading days or so, it's time to think hard about closing, rolling etc.

Not specifically directed at you Scoobie but I know folks here prefer absolutes rather than guidelines e.g. when it's Tuesday at 10.48 EST, the short strike is 12.6 points away, Neptune is in line with Venus and there are no butterflies flapping their wings in Guatemala then roll your position. Alas, I know of no absolutes of this nature for this strategy :) It's multi-multi-faceted.

No worries, constructive critisism is good. Noted, its a dynamic position and no easy answer for these positions.

For some basic guidelines that I've posted before, take a look at the following article from thinkorswim:

http://mediaserver.thinkorswim.com/articles/TPDubDiagArticle.pdf

Good luck.

MoMoney.
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I now have a double diagonal

SEP/OCT diagonals
1225/1200 @ 2.55
1350/1375 @1.10

Lets see how this one goes. Expect more delta neutralness protection as long as SPX stays between the short strikes. And if SPX ends reasonably close to either the short CALL or PUT strikes at SEP expirition, I expect good profits, especially on the PUT side. But the thing I like with the diagonals is that Theta will make me money as long as SPX stays between the short strikes.

If it ends right in the middle ie. 1287.5, i should still be mildly profitable (ie the profit curve/graph should not go into negative territory). Maybe it will go negative, because my short strikes is 125pts apart. Whereas Im learning from Murray's diagonal shorts which are 75 pts apart. However chances of ending up at 1287.5? Low.

Still...an interesting position and i'll see how it goes daily to get a good feel for these double diagonals with different parameters. A very small position and worth the tuition price. But I don't think I'll lose on this one :)

And thanks for the article Mo.
 
Quote from dagnyt:

The word on the street is that IB has very poor customer service. I've had mediocre success with them. They help with some issues, but not with others.

I have had some success calling thm and getting an order filled, but sometimes you wait on hold, just to get through to them.

The whole basis of their system - and the reason they charges so little in commissions - is that they work electronically. They are not set up to provide live trading help. But, as I said, if you do get through right away, they will make the effort to provide help.

Mark
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I agree they're pretty lousy. However they have live chat for urgent matters like trade problems.

They also have a ticket inquiry system but their answers are vague and you can tell they're not putting in the effort to help. Haven't bothered to use it much since.
 
As an exoeriment (IRA account) I sold my long Sep options, leaving myself naked short the August index options.

The trade went through - even though IB told me they would not allow it!!!!

Mark
 
Quote from dagnyt:

As an exoeriment (IRA account) I sold my long Sep options, leaving myself naked short the August index options.

The trade went through - even though IB told me they would not allow it!!!!

Mark
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Mark,

It is good news! Thanks.
 
Quote from scoobie27:

I now have a double diagonal

SEP/OCT diagonals
1225/1200 @ 2.55
1350/1375 @1.10
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Maybe I'm doing something wrong in ToS but I show this position with a large negative area at expiration with current vol levels.

Here is the graph I see when I plug the numbers into ToS:
 
Quote from ryank:

Maybe I'm doing something wrong in ToS but I show this position with a large negative area at expiration with current vol levels.

Here is the graph I see when I plug the numbers into ToS:
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Hi Ryan,

Thanks for the risk profile and you're probably correct. Its probably due to the fact that the distance between my short strikes is 125 pts. Where as Murray's distance between the shorts strikes (1225 - 1300) is only 75 pts. But as you said this is based on the low VIX. Im hoping the VIX will move higher over time. Unfortunately Im still trying to do these graphs in IB, but am gettin close.

My call diagonal is 1.10 debit and not a credit ( i wish), done on 16th Aug. The mid is currently 1.03.

Mmm..the loss area of 60pts doesn't look too good. Hope SPX falls and VIX rises. But i plan to scale into very small amounts of credit spreads like dagnyt to pay for my diagonal just in case SPX decides to stay in that range at expiry.
 
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