SPX Credit Spread Trader

El OchoCinco · Mar 10, 2006

You have the 1345/1375 spread now (inadvertently) for a credit of $1.50. If you buy the 1355/1365 bull call spread for $0.30 or $0.40 you will then have:

1345/1355 bear call spread & 1365/1375 bear call spread for total credit of $1.10 or so INSTEAD of the huge 30-point spread.

Mightr be easier for adjusting down the road if you need to since you will have 2 10-point spreads instead of 1 30-point spread which is too wide for you right now.

Quote from rdemyan:

Net credit on the 30 point spread is $1.50. I inadvertently "cancelled out" the 1360 call by getting the 1345/1360 call spread filled today when I already had an existing 1360/1375 call spread.

Not sure I see what you're suggesting.

El OchoCinco · Mar 10, 2006

Welcome to the thread and for participating.

Your SPX IC looks pretty good given the range expected from now until APRIL.

Good luck!

Quote from spreader2:

Hi Coach! Hope all is well. I've been doing Iron Condors and credit spreads on the SPX and RUT for about 2 years now. I've got my spreads on for April on both the SPX and the RUT. I've only been watching your posts for about a month now. Great work! I'm glad there's a forum for this strategy.

Here are my positions:

SPX: 1195/1180 - 1360/1375 IC for $1.30.

RUT: 650/640 - 800/810 IC for $1.00.

I put both positions on about 11 or 12 days ago. Just thought I'd share and introduce myself to the board.

Good luck everyone. Any comments on the positions?

rdemyan · Mar 10, 2006

Got it. What I initially missed is that I could potentially convert what was supposed to initially be two 15 point spreads into two 10 point spread bear calls; hence the overall lower credit.

Actually, this is an interesting idea because if the market goes down next week, I might be able to convert for $.15 or $.20 or even less and cut my margin without having sacrificed a proportionate reward.

I'll stay alert and see if this becomes a possibility.

Thanks!

Quote from optioncoach:

You have the 1345/1375 spread now (inadvertently) for a credit of $1.50. If you buy the 1355/1365 bull call spread for $0.30 or $0.40 you will then have:

1345/1355 bear call spread & 1365/1375 bear call spread for total credit of $1.10 or so INSTEAD of the huge 30-point spread.

Mightr be easier for adjusting down the road if you need to since you will have 2 10-point spreads instead of 1 30-point spread which is too wide for you right now.

spreader2 · Mar 10, 2006

CashCashe,

With this low vol environment, I have been putting on the condors a little earlier than I'd prefer. My main goal is just safety of course, but I realize that those extra couple of weeks can be painful too. This rangebound market has helped as of late.

As long as we're rangebound, low vol and hence cheaper premiums are something we have to deal with. In my opinion, the cure for low vol is low vol. Once we all get used to selling this, we can be sure something will happen to spike vol back up and allow us even wider ranges with less time to exp.

The problem is that I'll probably already be in a position when that event happens....

spreader2 · Mar 10, 2006

CashCache,

I forgot to answer all of your question. I apologize. I legged into the SPX IC, but sold the RUT IC all at once.

Sailing · Mar 10, 2006

Can you give us some insight as to how trading the RUT compares to trading the SPX, based on your credit trading experiences.

Thanks, Murray

Quote from spreader2:

Hi Coach! Hope all is well. I've been doing Iron Condors and credit spreads on the SPX and RUT for about 2 years now. I've got my spreads on for April on both the SPX and the RUT. I've only been watching your posts for about a month now. Great work! I'm glad there's a forum for this strategy.

Here are my positions:

SPX: 1195/1180 - 1360/1375 IC for $1.30.

RUT: 650/640 - 800/810 IC for $1.00.

I put both positions on about 11 or 12 days ago. Just thought I'd share and introduce myself to the board.

Good luck everyone. Any comments on the positions?

spreader2 · Mar 10, 2006

Sailing,

The RUT has strikes in 10 pt. increments and the implied vol is higher than that of the SPX. It's a little less liquid at times and the MM's are not always as willing to negotiate spread credits as easily as with the SPX.

I like trading the RUT mainly because I can create wide ranges, like 150 pts. for April and receive a pretty good premium. Be careful with the RUT though, it can be a wild animal at times.

Happy Trading!

RichardRimes · Mar 10, 2006

Quote from spreader2:

Sailing,

The RUT has strikes in 10 pt. increments and the implied vol is higher than that of the SPX. It's a little less liquid at times and the MM's are not always as willing to negotiate spread credits as easily as with the SPX.

I like trading the RUT mainly because I can create wide ranges, like 150 pts. for April and receive a pretty good premium. Be careful with the RUT though, it can be a wild animal at times.

Happy Trading!

geez...there are tougher MM's than at the SPX :eek:

:eek:

B5476 · Mar 10, 2006

Quote from DonnaV:

geez...there are tougher MM's than at the SPX :eek: :eek:

Yes there are. The RUTmm's are particularly difficult to deal with if the market moves a lot and you need to adjust/close a position. Under those circumstances they are merciless at extracting every ounce of blood from you.

rdemyan · Mar 10, 2006

My experience is the same. Those RBs at the RUT made me pay twice what I expected to pay to get out of a position that was starting to go against me.

Quote from B5476:

Yes there are. The RUTmm's are particularly difficult to deal with if the market moves a lot and you need to adjust/close a position. Under those circumstances they are merciless at extracting every ounce of blood from you.