SPX Credit Spread Trader

[rdemyan]

Rally:

How can you be so sure that there will be a "better price" soon enough to provide reasonable premium for April on the FOTM spreads that we trade?

I follow a group of day traders, and I can tell you these guys are more often than not puzzled by how the market moves. They use sophisticated TA tools and most have over 25 years of experience. They say the biggest single thing that appears to be moving the markets, and not always in the direction TA would indicate, is program trading. I posted a chart recently which demonstrated the massive increase in program trading as a percentage of volume traded over the last few years.

Quote from rallymode:

optioncoach -> i am curious as to why you open positions on a day like today. For example, you just opened that put spread when we are nowhere near the lower end of the current trading range. Wouldn't it cut your risk significantly(or in your case the need to hedge) if u were to wait until a better current SPX price??

 

[rallymode]

Quote from rdemyan:

Rally:

How can you be so sure that there will be a "better price" soon enough to provide reasonable premium for April on the FOTM spreads that we trade?

Oh i am far from being sure. But due to the todays price action, it is likely that the SPX will move back to its trading range i.e. probably retest the lows again.

But I see what you guys are saying if you must be in a trade then i guess today is as good as any.

Since i go for closer OTM strikes, for me it is imperative that i wait for a good entry. And if i dont get a better price entry then i just don't enter in a trade.

 

[El OchoCinco]

I have too much wax in my wings to fly that close to the sun

 

[rdemyan]

Yes, I agree with you that your strategy requires closer attention to entry points.

I look forward to reading your trading posts. For my benefit and others who are interested, I'd appreciate it if you wouldn't mind adding a brief blurb about the entry point, i.e. top of trading range, breakout, etc. Just a request; your call, of course, on how much or little you want to post.

Like I said before, I suspect that one day I'll have to (because FOTM premiums are too low) or I'll have the time availabe to devote to a strategy similar to yours. So it's great to have the opportunity to preview how adjustment intensive this strategy is.

Just as an aside: I got filled today when the SPX was down about 3.5 points. It's now down almost 8 points and the mid on my spread is still at $0.50, which is what I got. Of course, the movement on your closer OTM spreads would be greater.

Thanks and Good Trading!

Quote from rallymode:

Oh i am far from being sure. But due to the todays price action, it is likely that the SPX will move back to its trading range i.e. probably retest the lows again.

But I see what you guys are saying if you must be in a trade then i guess today is as good as any.

Since i go for closer OTM strikes, for me it is imperative that i wait for a good entry. And if i dont get a better price entry then i just don't enter in a trade.

 

[ryank]

Quote from rdemyan:


Just as an aside: I got filled today when the SPX was down about 3.5 points. It's now down almost 8 points and the mid on my spread is still at $0.50, which is what I got. Of course, the movement on your closer OTM spreads would be greater.

Thanks and Good Trading!

I got filled and the market kept dropping too. My mid popped a bit but not too far from where I got filled. The mid is now back down to .05 above my fill. Funny how these OTM spreads work sometimes.

ryan

just trying to keep the wax on my wings

 

[rdemyan]

Ryan:

Are you talking about the paper trade you placed or a real trade?

Quote from ryank:

I got filled and the market kept dropping too. My mid popped a bit but not too far from where I got filled. The mid is now back down to .05 above my fill. Funny how these OTM spreads work sometimes.

ryan

just trying to keep the wax on my wings

 

[ryank]

Quote from rdemyan:

Ryan:

Are you talking about the paper trade you placed or a real trade?

This one is real.

ryan

 

[rdemyan]

Can I ask which strikes you selected?

Quote from ryank:

This one is real.

ryan

 

[rallymode]

Quote from rdemyan:



I look forward to reading your trading posts. For my benefit and others who are interested, I'd appreciate it if you wouldn't mind adding a brief blurb about the entry point, i.e. top of trading range, breakout, etc. Just a request; your call, of course, on how much or little you want to post.

I have the APR 1245/1250 Put Spread and APR 1330/1335 Call Spread. I will adjust when/if the market hits my short strikes and certainly make a post about it.

Right now, it seems the SPX has broken the support line and we maybe stuck inside the old trading range for a while, which i am sure is good for all of us.

 

[rdemyan]

I assume you meant APR 1245/1250 bull put spread?

I was thinking about my comment that your closer OTM spreads will have more movement, but I forgot that you typically do 5 point spreads. So, I'm not sure that they would move as much as I thought. This could be tested with a pricing model, but too busy to spend the time. Easier to post and ask

Quote from rallymode:

I have the APR 1345/1350 Put Spread and APR 1330/1335 Call Spread. I will adjust when/if the market hits my short strikes and certainly make a post about it.

Right now, it seems the SPX has broken the support line and we maybe stuck inside the old trading range for a while, which i am sure is good for all of us.