SPX Credit Spread Trader

Quote from rallymode:

well, with risk to sound like the people we just mentioned, whats good for me probably won't be good for you :D

...but i will post some of my future positions as i get into them. My option trading on individual issues is strictly wrapped around high R/R trades with lower probability of success with occasional short term directional play. I usually do 7/1s to 10/1s.

Callendar calls and FLYS are my favorite trades.
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Your probably right.:D But seriously, there's more than one way to skin a cat. What you like for a FLY, I might like for something else. Just mentioning the ticker is good enough sometimes.
 
coach,

i have a question for you with regards to margin. I am sure you have the answer since your spreads require a huge margin.

Is a large SPY position marginable? Can you use say 500 SPYs as margin instead of pure cash?

for example, when you are thinking of hedging, is it possible for you to buy say 500-1000 SPYs without affecting ur margin, since you got a 250k account.
 
Quote from rallymode:

ok,

BRCM
JNPR
MRVL
AAPL
AMD
YHOO

:)
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Wow, we must be on the same wavelength! No kidding, I just analyzed all of those last night. That's why I was trying to get into AMD today. Ooops... I didn't look at MRVL. Maybe that'll be a good one. I'll have to check it out. :)
 
If you mean a large SPY stock position, stock is marginable up to 50%. So if you have $100,000 in SPY, you can do credit spreads for $50,000. But you have double risk. If market falls and you have OTM put credit spreads you could lose on both positions.

If you mean SPY options, since SPYs are 1/10th the SPX you need to buy 10 times as many for a perfect hedge which results in a net debit and a loss cause it eats all your credit. You can use smaller SPY put or call positions like I have done in the past for partial hedges but these are really to generate profits to help defray the costs of adjustments or reduce losses on closing positions. They are not perfect hedges.

In both cases, buying SPY stock or options requires cash and if all your cash is tied up in SPX margin requirement, there might be some restrictions on your buying power. In a risk-based haricut account, you can cross-margin.

But in general SPY hedges are only for partial hedging in small numbers.

I will re post all my positions again where have a SPY partial hedge for my 1225/1235 Put position.



Quote from rallymode:

coach,

i have a question for you with regards to margin. I am sure you have the answer since your spreads require a huge margin.

Is a large SPY position marginable? Can you use say 500 SPYs as margin instead of pure cash?

for example, when you are thinking of hedging, is it possible for you to buy say 500-1000 SPYs without affecting ur margin, since you got a 250k account.
More...
 
Quote from optioncoach:

If you mean a large SPY stock position, stock is marginable up to 50%. So if you have $100,000 in SPY, you can do credit spreads for $50,000. But you have double risk. If market falls and you have OTM put credit spreads you could lose on both positions.
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What you said doesnt even sound like a hedge, more like a suicide :D

The reason i asked is because i've been on a search for a better hedge for the spreads you are trading.

Before you knock me down. Yes, i know, i am going against all odds and against 790 pages of posts from knowledgeable people giving their suggestions, but what the hell who doesnt love a good challenge, right?

Have you tried hedging the move towards your shorts using deltra neutral trades?
 
As posted above, the link is www.washingtonbusinessradio.com and you can click on the Listen Live button in the upper right hand corner.

Just to let you know that the show is more for beginner and intermediate investors so the info will be stuff you are quite familiar with lol. It is hard to do complex things just listening to my voice and also the goal is to educate stock investors and option traders in how to use them properly :D


Quote from Maverick74:

Phil,

You may have posted this before, but do you have a link to your radio show?
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Well remember, the SPY options added are not meant to be any significant hedge. They are meant to finance an adjustment to the position to an extent. Buried in this thread are different examples of where the adjustment cost was reduced from SPY hedges. The SPY hedges are not for huge moves against me or black swan events.

I have been talking with another fund manager about an idea (his to give him credit) in how to hedge against a black swan event and it was pretty impressive. I will give you more details when I work them out a bit.

there is no perfect hedge for credit spreads. You have to adjust on small moves and get the heck out of the way on major moves. But even converting to a FLY or BOXing the position if you can get a better fill than closing are ways to reduce the risk so that you never take the max loss.

I will post later with more info :D


Quote from rallymode:

What you said doesnt even sound like a hedge, more like a suicide :D

The reason i asked is because i've been on a search for a better hedge for the spreads you are trading.

Before you knock me down. Yes, i know, i am going against all odds and against 790 pages of posts from knowledgeable people giving their suggestions, but what the hell who doesnt love a good challenge, right?

Have you tried hedging the move towards your shorts using deltra neutral trades?
More...
 
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