SPX Credit Spread Trader

[chrdso]

Quote from rdemyan:

The last couple of months have been really good for bear calls and I did very well. Since I've been posting my good results I need to be fair and post the losers as well.

I also lost on XEO CTM bear call spreads this month. Last couple of months were really good too - 25%-40% profit. Lost 33% this month. I trade with less than half of the amount allocated for spreads, so I had enough for the rolls.

Although I rolled twice, I have a loss for this month.
The second time was out to the next month and I increased the number of spreads. So, there is still a chance of recovering from this month's loss.

Lessons learned:

1) CTM spreads must be opened at the top/bottom of the trading range. Although, I opened the spreads around the expiration of the previous month, the index was not at the top of the trading range.

2) In an uptrend, close bear calls at 80%-70% profit, if the index moves down, but stalls at the 20 day moving average. If it does not close below the average, but above the previous days close, most likely it will resume the uptrend. This is what happened this month.

3) Avoid expiration week (close/roll out)-unless the index is in a downtrend and you only have bear call spreads.

 

[yip1997]

Quote from Sailing:

Yip,

Series 7 required since they are a Broker/Dealer.

A few $$ to join....

Minimum 1 million personal assets (SEC rule)

Minimum 25K trading account

You may consider banning together as a group in your area.. as we are doing. Only the controlling person is liable for the Series 7, and if you merge accounts.... you'll gain the benefits of cross-margin on various indexes, ETFs, and securities.

We're setting up a group account and distributing all losses and profits amongst all the accounts equally.

Murray,

Thanks for the info. I don't think you need 1 mil personal assets for trading prop. But You do need 1 million to participate in a hedge fund.

When you join a prop firm, your account is non-segregated. I just wonder how you protect your own capital. I called them but they said they won't tell me their financial situation. I have no ways of getting their financial reports and that scares me.

 

[Maverick74]

Quote from yip1997:

Murray,

Thanks for the info. I don't think you need 1 mil personal assets for trading prop. But You do need 1 million to participate in a hedge fund.

When you join a prop firm, your account is non-segregated. I just wonder how you protect your own capital. I called them but they said they won't tell me their financial situation. I have no ways of getting their financial reports and that scares me.

Yip,

I'm not sure who you called, your welcome to call me in Chicago. No, we do not give out our financials to every guy from ET that calls. We did send Murray our financials over the last 5 years. It's not a matter of it being scary or not, it's just that we are not a publicly traded company and have no obligation to make that information public. We do make it public to all large accounts that inquire. We do this for obvious reasons.

 

[yip1997]

Quote from Maverick74:

Yip,

I'm not sure who you called, your welcome to call me in Chicago. No, we do not give out our financials to every guy from ET that calls. We did send Murray our financials over the last 5 years. It's not a matter of it being scary or not, it's just that we are not a publicly traded company and have no obligation to make that information public. We do make it public to all large accounts that inquire. We do this for obvious reasons.

Mav,

I called the number from the vtradergroup.com website. I knew you run an office in Chicago, and I respected your honesty in this forum. I have to admit I learned a lot from you since tape reading.

I have friends who lose their capitals and trading profits in WorldCo, and thats why I am very careful before I join any prop firms. You have my respect and my doubt is not personal. Sometimes it is out of your control. Risk management is the key for prop firms. I will call you Monday to find out more.

 

[Trader2Be]

Quote from chrdso:



1) CTM spreads must be opened at the top/bottom of the trading range. Although, I opened the spreads around the expiration of the previous month, the index was not at the top of the trading range.

I'm sorry, but what is a CTM spread? You probably defined it earlier in the thread, but I am not familiar with your vernacular. Thanks!

 

[yip1997]

This is my best month for option trading. I made 4 verticals and 1 diagonal. All 4 verticals made $ and the diagonal lost 50% of initial debit because of a sharp decline in IV.

Though my major profit is still coming from naked writes, I found verticals provide a higher return on margin than naked writes.

 

[yip1997]

Quote from Trader2Be:

I'm sorry, but what is a CTM spread? You probably defined it earlier in the thread, but I am not familiar with your vernacular. Thanks!

Close to Money.

 

[Sailing]

Mav.

Nice to know you're still lurking the site.

Apprears to be interest in Prop Firms.... so I posted your number a while back. Hope this doesn't shut down the Chicago Land Line service next week.

M~

 

[Sailing]

Diagonal Follow Up Report:

After looking back over the past week.... The VIX had dropped 15% for the week. That was a huge blow to the diagonal positions. It just happened by luck that the SPX closed at the maximum profit point for the double diagonal which I posted earlier.

The Quintuple Diagonal, which was also posted earlier, got pretty much slamed because of the VEGA drop. It ended up only 3% for the month.... no complaints. The short strikes were spread out more and smaller in number on the higher side.


That said... we're looking at a 2-4 month Digagonal using all puts. Although a greater amount of patience and diligence is required, we think the flexibility will gain a more consistent return rate. We're not complaining about the return rate thus far... the past six months have been awesome... but we're trying to eliminate fighting the b/a on at least every months positions, and also have the flexibility to buy back the shorts to reposition them accordingly. All experimental.... but we'll keep you updated.

Now.. back to your regularly scheduled credit spread forum.

M~

 

[ChrisM]

Quote from Maverick74:

Yip,

I'm not sure who you called, your welcome to call me in Chicago. No, we do not give out our financials to every guy from ET that calls. We did send Murray our financials over the last 5 years. It's not a matter of it being scary or not, it's just that we are not a publicly traded company and have no obligation to make that information public. We do make it public to all large accounts that inquire. We do this for obvious reasons.

Maverick,

thank you for clarifying your position on ET.