SPX Credit Spread Trader

Well the market has some negative price movements the past few days but the price did bounce off the upper line of the previous channel, as of 3:15 PM or so today. I think if it bounces off then for the next week we are in the 1270/1290 range and looking further out 1270/1295 range as that resistance has held pretty well so far.

Interesting to note that the MAR 1275 Straddle is selling for about $19.00 and I do not feel that we will trade outside that range really for the next week. I might be tempted to sell one of those straddles for some small time change and remaining theta.


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Then I will either roll the strikes down, convert to skip strike butterfly, add partial hedges if I am still somewhat OTM, BOX the position if it is cheaper than closing and add more OTM strikes and roll down calls as well.

A large down move is not a problem, it is whether the market keeps falling and moving hard to my short strikes and how much time to expiration there is. OCT was a sharp downward move and I adjusted once down to stay ahead of it. If it kept crashing then it was either get out or convert to a FLY to limit my loss.


Quote from ChrisM:

You can`t give up on this just like that with such RR ratio.
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Quote from optioncoach:

Then I will either roll the strikes down, convert to skip strike butterfly, add partial hedges if I am still somewhat OTM, BOX the position if it is cheaper than closing and add more OTM strikes and roll down calls as well.

A large down move is not a problem, it is whether the market keeps falling and moving hard to my short strikes and how much time to expiration there is. OCT was a sharp downward move and I adjusted once down to stay ahead of it. If it kept crashing then it was either get out or convert to a FLY to limit my loss.
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You just have killed me.

I thought that what I was doing was my little secret :)

Thanks
 
As I said above, the MAR 1275 Straddle is trading at around $19.00 or so on the bid. That puts a range of 1294 to 1256 for a week. I think the market bouncing off the channel line in my chart and the sideways movement we have been having means for another week we will also bounce around. So to take advantage of this I decided to take a short-term play on this and do the following:

- 5 MAR SPX 1275 Straddles @ $19.40

Credit = $9,700 or so after commissions.


My stop loss on the Straddle is $29 or 10 points since I do not see us moving that far away from 1275. The question was aked about what range for MAR expiration and I think the straddle range is too wide and therefore am selling it. I also will consider rolling into an IRON FLY (a la riskarb if we get some real decay in the wings.

Will keep you updated ;).
 
Only you and I read this so your secret is safe with us.... I mean me.

:D

Quote from ChrisM:

You just have killed me.

I thought that what I was doing was my little secret :)

Thanks
More...
 
I am a newbe to this great educatonal thread and now have a very good idea how I should be adjusting when the index is closing in on my short position. In the past I have been setting stop loss orders (ouch) and closing out (ouch again). Rolling and hedging are new trading plan strategies I want to use once I better understand them. I have ordered the coaches book this week and will start learning and practicing (papertrading) this risk management strategy. Below are my open positions. All my IC's in Jan and Feb expired worthless and I hope my Mar IC's do the same. My goal is to earn 2% - 4% monthly net of commissions.

NDX Mar 1775/1800 Call
NDX Mar 1550/1525 Put
NDX Closed at 1661 today

OEX Mar 605/615 Call
OEX Mar 550/540 Put
OEX Closed at 581 today

RUT Mar 770/790 Call
RUT Mar 680/660 Put
RUT Closed at 721 today

SPX Mar 1230/1240 Put

SPX MAR WK B 1255/1270 Put (JXBOK & JXBON)

April Positions:

SPX Apr 1340/1350 Call

Not Filled Yet:

SPX Apr 1165/1175 Put
 
Just one quick comment as I run out the door. DOing ICs on OEX and SPX regularly is loading up the boat in my opinion since the OEX and SPX are highly correlated. So you have two separate posiitons of margin at risk both susceptible to the same wild price swings. I occasionally will have an OEX and SPX position on but do not try and do it each and every month. Losses on one position might exist in the other so you might take a large hit that one or two times you have to adjust or close out or hedge.

Also use XEO instead which is European style. Even though we never let out short strikes go ITM it is nice to remove early assignment completely from our risk profile.

Good luck and welcome to the thread.
 
I'm going to be out of the country for a week at the end of April. I'm curious on everyone's thoughts on placing a credit spread or condor for April, knowing I may have little access to the internet for trading and certainly no real time access.

My personal plan is to clear the board. I have a couple of calendar diagonals, that I will leave running. But I'm going to cash in the mean time. Want to leave and return without having to worry. I'd feel really dumb leaving and having a major market move against me. But I'd like to hear others thoughts.

(PS Say a prayer for us. We're going on a medical mission in El Salvador. Setting up a dental clinic in an orphanage down there.):confused:
 
Quote from gatorplease:

I'm going to be out of the country for a week at the end of April. I'm curious on everyone's thoughts on placing a credit spread or condor for April, knowing I may have little access to the internet for trading and certainly no real time access.

My personal plan is to clear the board. I have a couple of calendar diagonals, that I will leave running. But I'm going to cash in the mean time. Want to leave and return without having to worry. I'd feel really dumb leaving and having a major market move against me. But I'd like to hear others thoughts.

(PS Say a prayer for us. We're going on a medical mission in El Salvador. Setting up a dental clinic in an orphanage down there.):confused:
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One time I went on a honeymoon to Costa Rica a couple weeks before expiration thinking that I was easy far enough OTM that I wouldn't have to worry. I got back a few days before SET and my FOTM credit verticals were now ATM verticals. I've told myself since that if I'll not have access for more than a day or so, cash is the best position to have. But that doesn't necessarily mean that you couldn't put on a position and try for some theta decay and favorable price action until you leave.:D
 
Quote from optioncoach:

As I said above, the MAR 1275 Straddle is trading at around $19.00 or so on the bid. That puts a range of 1294 to 1256 for a week. I think the market bouncing off the channel line in my chart and the sideways movement we have been having means for another week we will also bounce around. So to take advantage of this I decided to take a short-term play on this and do the following:

- 5 MAR SPX 1275 Straddles @ $19.40

Credit = $9,700 or so after commissions.


My stop loss on the Straddle is $29 or 10 points since I do not see us moving that far away from 1275. The question was aked about what range for MAR expiration and I think the straddle range is too wide and therefore am selling it. I also will consider rolling into an IRON FLY (a la riskarb if we get some real decay in the wings.

Will keep you updated ;).
More...

Any thoughts on a quickie condor-10 pts 1240/1250-1300/1310 brings $2. Another way to play this for less maintenance.
 
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