SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Let's not forget to give JA her due...she is the offical woman of the SPX Credit Spread Trader thread!
That's where I was making the mistake. Thanks. I was also doing an analysis on this position if there were to be another run like there was in OCT last year. You would be at about 620-630 at APR expiry. With all things held constant, it would then be a losing position. But the big run in OCT resulted in a 400 point (4%) increase in volatility. So what would have been a losing position now would've actually made more than your projected max gain ($2000+ whereas the projected max gain was $1400). The question then is, will there always be enough of a Vega increase when the index rallies? If planning on holding to expiry, that increase must be assumed.
Well we are at a critical test point of this breakout over 1300. This chart is from the morning opening today and yesterdays move was a pullback to the support line. What is curcial now is whether support will hold confirming the breakout or it will run back below 1295 or so and become a false pop-up. As I write this the market has turned slightly positive so watch this today.
I'm looking at the 1220/1230 or 1225/1235 put spreads and I am watching the support line closely. My trading rules don't let me trade until after 10 (preferably 10:30) so I am watching the action closely today. I want to make sure I get the best premium I can for the spread but I don't want the market to take off upwards either and miss the opportunity. I guess I am trying to time my entry on the put spreads. Of course, nothing says I have to trade right?
ryan
Not only are MAR spreads too close to the money, but they have already expired! The call strikes would raise some concerns. If the FED says we are done raising rates, watch out above!
I do not think it is very likely but I usually play 60 - 70 points OTM for 1 month to expiration, you are playing it for 2 months to expiration so just be aware that it is not a difficult move for the market to make if the FED steps out of the way. Look at post Katrina from 1170 to 1250 in 2 months.
Just be aware of factors that could lead to huge surge in 2 months time...
Just be aware of factors that could lead to huge surge in 2 months time...
Thanks, that's very helpful.
This might be interesting:
APR 1175/1200/1375/1400 IC is $0.45
MAY 1175/1200/1375/1400 IC is $2.10
The IC in MAY gives almost 5 times more credit than the same IC in APR.... BUT the probabilities for MAY are not 5x higher than APR. So it seems the MAY IC is a better deal?
This might be interesting:
APR 1175/1200/1375/1400 IC is $0.45
MAY 1175/1200/1375/1400 IC is $2.10
The IC in MAY gives almost 5 times more credit than the same IC in APR.... BUT the probabilities for MAY are not 5x higher than APR. So it seems the MAY IC is a better deal?