SPX Credit Spread Trader

[El OchoCinco]

I converted my short straddles on the SPX into IRON FLYs.

Remember initial position was:

- 5 MAR SPX 1275 Straddles @ $19.50

Credit = $9,750

I could have closed the straddle at around $16 wit a good fill for a profit of $3.50 or $1,750.

However I decided to buy the MAR 1280C/1270P Strangle for $11.60. This leaves a net credit of $7.90 with a minimum guaranteed credit of $2.90 or $1,450 with the potential for another $2,500.

I may also sell the 128 straddle since I see us being rangebound for the last 4 days and there is still some decent premium to sell. Not sure if I will do it yet but will do smaller contracts as well.

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 @ $19.50

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 .

 

[chrdso]

Quote from optioncoach:

I converted my short straddles on the SPX into IRON FLYs.

Coach,

This strategy seems to work well in a range-bound market.

What credit spreads do you have for Apr.?




Donna, do you have any positions on for Apr.?

 

[BoSox1962]

Coach,

New to the Thread, been reading and following closely for a while.

Just enterin gthe world of IC's. Woud lbe intersted in you comments on my two current trades:

1. Mar Spx 1225/1245/1305/1325 entered for 2.00, expires Friday

2. Apr Spx 1210/1225/1345/1360 entered for 1.45,

Woudl like you review, good or bad.

Thanks BoSox1962

 

[augiedixit]

Hi,

I am new to this forum. I have learnt a lot from reading the posts on this from. I am glad such a forum exists. Anyways, I have follownig IC;

April RUT 780/790 bear call spread
April RUT 660/650 bull put spread

Total credit $1.65

What is your opinion on this IC?.

Also I am looking to do IC on April SPX. looking at 1340/1350 bear call spread and 1200/1190 bull put spread.

Any comments welcome

 

[piccon]

To tell you the truth, you and I are on the same page.

This morning I entered RUT 780/790 @ $1 filled
I have an order for RUT 660/650 @ $1 Waiting for pullback to be filled.

I also have 1340/1350 order @0.90 to be filled. I thought I could get filled this morning but didn't. Hopefuly tomorrow. I am also looking at SPX 1200/1190 or 1210/1200.

We have the same Strikes but I am looking for better fills.

I expect market to pullback. I am not rushing to be filled I just want to make sure I get the best possible fill. So I enter Call spreads only when the market is going up and Put spreads only when market is going down.

This way you can easily get a return of 5K for 40k margin (12%) and still be FOTM. This is possible by combining RUT, OEX and SPX ICs

Quote from augiedixit:

Hi,

I am new to this forum. I have learnt a lot from reading the posts on this from. I am glad such a forum exists. Anyways, I have follownig IC;

April RUT 780/790 bear call spread
April RUT 660/650 bull put spread

Total credit $1.65

What is your opinion on this IC?.

Also I am looking to do IC on April SPX. looking at 1340/1350 bear call spread and 1200/1190 bull put spread.

Any comments welcome

 

[chrdso]

Quote from piccon:


I also have 1340/1350 order @0.90 to be filled. I thought I could get filled this morning but didn't. Hopefuly tomorrow.

I had an order in this morning for SPX 1340/1350 @.90 also.

Did not get filled even when the spread was at 1.05.

I reduced from .90 to .85 to .80 to .75. Finally filled at .70.

I feel the market will move sideways/down in April. That's why I wanted a fill on the call side. I will wait for a down day to complete the put side.

 

[augiedixit]

Thanks piccon for your comments.

I wonder what indicator/tech analysis you use to do the bear call spread and bull put spread. Some guidelines/criteria might be of great help.

Also I don't know any of the hedging techniques. How do you protect your spreads if the market goes against you.

Right now I just arbitrarily do OTM far enough, say about 60 points away to pick the strike price to sell on either side when less than 45 days to go before expiration on SPX or RUT.

Again any comment/input will be appreciated.

Thanks

 

[piccon]

I use mostly Stochastic for my entry point. Moving averages 50, 200 as resistance support and hide my strikes behind them.

But I choose my strikes with a software that I write. It's based on past movement of the indices. Taking : Low, High, lowest highest point of the last 20-30 trading days and do some statistical analysis. From that I get a call spread and put strikes.

Once I have a strike selection I can move it +10 -20 points for further protection. But I will never go below my short strike calculated.

The reason I choose RUT 780 is because the last 20 trading days activities give me a strike at 763 and I adjusted it to 780.

The put strike I got is 691 but because of my bias for this month, I want to go and hide myself below MA(200) at 660
So I will do 780/790 RUT 660/650

I am doing OEX 600/605 and 565/560

SPX : I have more room to play. but you shouldn't go lower than 1330 for call and not higher than 1225 for put.

I l;ook at stochastic to decide when to enter and also if hedging is necessary.

I hope this helps.

My software gives me the correct strikes for the last 5 consecutive months (since Im wrote the program in november). If I am in trouble sometimes it's not because I didn't get the right strike but because of my ego and lack of discipline.

Since November I have been on this board, thnks to coach and others, I have been making money on a regular basis.

Quote from augiedixit:

Thanks piccon for your comments.

I wonder what indicator/tech analysis you use to do the bear call spread and bull put spread. Some guidelines/criteria might be of great help.

Also I don't know any of the hedging techniques. How do you protect your spreads if the market goes against you.

Right now I just arbitrarily do OTM far enough, say about 60 points away to pick the strike price to sell on either side when less than 45 days to go before expiration on SPX or RUT.

Again any comment/input will be appreciated.

Thanks

 

[augiedixit]

Thanks again piccon for sharing your strategies.

Wow, You have your own software that predicts which strike price to use for credit spreads! Congrats.

Please keep sharing your success stories on this forum.

 

[ryank]

Hmmmm, as I type this the SPX is at 1297.1 and is up 12.97 on the day. I think the gods of resistance are about to bite the dust or show us their power.

ryan