SPX Credit Spread Trader

I am considering opening a trading account with IB to reduce my trading expenses. The only trades I will execute are FOTM net credit spreads on the SPX, RUT, OEX and NDX index's. I have a few questions to this broad before I apply for an account:

1- Doe's IB have an order entry screen like OX that allows me to input both legs of my credit spread and then a limit credit amount for the entire spread as a GTC order.

2- Do they have an Iron Condor order entry screen for entering all 4 legs and one limit credit for the entrie IC trade.

3- Is margin only required to cover one of the spread legs.

4- Do they require margin be in cash. Or can I invest my trading capital in ETC's and use 50% for my margin requirements.

I am not interested in trading futures or any other type of option strategy at this time. I just want to improve my net return by lowering my commissions.

Thanks to everyone on this broad for sharing their experiences and knowlege.
 
Quote from optioncoach:

I can only give you my opinion since adequate risk and goals is a personal thing and different for every trader. I am basically looking for 2 - 3% a month consistently. Even thbough my initial trade return o margin was 5%, I may add some hedges that brings that return down slightly. SOme months I get the 4 - 5%, others I am 1 - 3% so it averages out.

Assuming I can do these 10 times without any losses, I shoot for 15 - 20% on the conservative side of my whole portfolio (not just margin at risk). Actual returns are much higher on a good year but I like to be conservative in these goals so I do not get too greedy. With 1 drawdown I usually end up between 10 and 15% on the conservative side. With two it can be between 5 and 10% for the year but in a year with two drawdown it usually means the market is having a flat to bad year so being positive is still good for me. This comes from real trading history and some backtesting. To cut right to the fat, I want 15% a year.

Now my capital is not sitting in cash, I have it invested elsewhere and use it as collateral for my spread trades- getting two bangs for the same bucks. Credit spreads do not require the maring to be in cash. So I actually earn more than just the spreads which boosts my overall return or hedges partial losses.

AS for adequate risk, this is a personal thing. I would never put 100% of the portfolio at risk using this strategy and usually come closer to 50% with strict risk management. Due to leverage the return on the 50% of the portfolio is more than enough to account for significant returns on the whole portfolio. I will not elaborate more on how I have the 100% invested since I have to keep some things proprietary but it helps boost my overall returns.
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It seems how to calculate a meaningful return rate of options trading against what sort of (employed) capital base would not be an easy task. :confused:
 
To keep it simple, I basically stick with looking at the return on the actual max capital at risk in a given spread. For credit spreads, although I have said this many different ways, basically I would love 3% minimum on any position I enter. However I take into account the location of the strikes. I would accept 2% for much safer strikes than shoot for 5% and be out of my comfort zone.

For diagonals, since I am walking into this new, I basically am looking for strikes I like and a decent credit. What is a decent credit? Still learning but 2-3% to start out with seems a good place to start. Since diagonals have so many adjustment possibilities I can add more premium as I did with my current diagonal.

Quote from OddTrader:

It seems how to calculate a meaningful return rate of options trading against what sort of (employed) capital base would not be an easy task. :confused:
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Quote from FitForLife:

I am considering opening a trading account with IB to reduce my trading expenses. The only trades I will execute are FOTM net credit spreads on the SPX, RUT, OEX and NDX index's. I have a few questions to this broad before I apply for an account:

1- Doe's IB have an order entry screen like OX that allows me to input both legs of my credit spread and then a limit credit amount for the entire spread as a GTC order.

----> IB does have credit spread order screens, do not remember if they have IC order screens as well.

2- Do they have an Iron Condor order entry screen for entering all 4 legs and one limit credit for the entrie IC trade.

3- Is margin only required to cover one of the spread legs.

----> For an IC with equidistant strikes, the broker should only count one side for margin. OX and ToS do this and I believe IB should as well.

4- Do they require margin be in cash. Or can I invest my trading capital in ETC's and use 50% for my margin requirements.

----> Margin can be in cash or stocks (I use closed end funds and cash combined). Cash is marginable at 100%, stocks at 50%, treasuries should be at 95%.

I am not interested in trading futures or any other type of option strategy at this time. I just want to improve my net return by lowering my commissions.

Thanks to everyone on this broad for sharing their experiences and knowlege.
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Quote from FitForLife:



1- Doe's IB have an order entry screen like OX that allows me to input both legs of my credit spread and then a limit credit amount for the entire spread as a GTC order.

2- Do they have an Iron Condor order entry screen for entering all 4 legs and one limit credit for the entrie IC trade.

/B]
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1. IB spread order system is somewhat inefficient. I have learned from ktm that you need corresponding spread order on opposite side to get filled. Otherwise your spread order may hang on on the screen no matter bid/ask between legs is the same as your limit price.

2. No, but even if they had it would not be reliable with present spread order system.
 
Try calling or emailing them your questions. They have recently adopted a few changes which people at this group site may not be aware.

Oh, and if you can't get through to them, or they don't respond in a timely fashion, consider trying ThinkorSwim.

If SPAN margin is your reasoning then IB is your place, but ThinkorSwim will soon be addressing this issue as well.

Let us know your outcome....

M~



Quote from FitForLife:

I am considering opening a trading account with IB to reduce my trading expenses. The only trades I will execute are FOTM net credit spreads on the SPX, RUT, OEX and NDX index's. I have a few questions to this broad before I apply for an account:

1- Doe's IB have an order entry screen like OX that allows me to input both legs of my credit spread and then a limit credit amount for the entire spread as a GTC order.

2- Do they have an Iron Condor order entry screen for entering all 4 legs and one limit credit for the entrie IC trade.

3- Is margin only required to cover one of the spread legs.

4- Do they require margin be in cash. Or can I invest my trading capital in ETC's and use 50% for my margin requirements.

I am not interested in trading futures or any other type of option strategy at this time. I just want to improve my net return by lowering my commissions.

Thanks to everyone on this broad for sharing their experiences and knowlege.
More...
 
Hey all,
I've been out of touch for the last 14 days, and I'm looking to put on some Sept positions. I'm currently reading all the talking heads but I figured I'd ask this group as well. Anyone have SPX levels in mind that they are looking at?
A service I get has the Sept range at 1180 to 1310, but wondering if the members here might have any insight. I sense we're in a neutral to uptrending market for Sept Ex, opinions?
Rally any nice charts or channel entry points?

I currently have a 10xSPX SEPT/OCT PUT DIAG 1225/1200 with the VIX at 14.5ish. VIX is now at 12.42 so my diag is hurting a but, but no worries yet.

brrrrrrr...
 
Quote from Sailing:

Try calling or emailing them your questions. They have recently adopted a few changes which people at this group site may not be aware.

M~
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Correct,

I can see this in my screen.

it must have been added just recently.

Did you try these features ?
 
Quote from ChrisM:

1. IB spread order system is somewhat inefficient. I have learned from ktm that you need corresponding spread order on opposite side to get filled. Otherwise your spread order may hang on on the screen no matter bid/ask between legs is the same as your limit price.
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Surely you don't mean spoofing? That would be breaking exchange rules. You must mean something else...:D
 
Quote from ChrisM:

1. IB spread order system is somewhat inefficient. I have learned from ktm that you need corresponding spread order on opposite side to get filled. Otherwise your spread order may hang on on the screen no matter bid/ask between legs is the same as your limit price.

2. No, but even if they had it would not be reliable with present spread order system.
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I don't think so Chris. IB will guarantee fills on complex spreads, provided you are hitting the bid or offer.
 
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