SPX Credit Spread Trader

So Maverick, basically what you're saying is:

Gay Sex = Credit Spreads

What options positions do you like? Besides credit spreads, I mean.



Quote from Maverick74:

Phil,

I had typed a long response here to this post but accidently deleted it. I really don't feel like re-writing it. So I'll try to sum it up very quickly.

I gave Donna a proportional response to the absurdity of her comment. I understand now she did not make herself very clear at all. She never said anything about her history only relating to that strategy. Anyway, I am very blunt with people. Most people hate that, some people like it. Good thing I have nothing to sell or I would be in trouble.

Real quickly now on your credit spreads, I am not arguing whether the strategy is good or bad. Simply that people don't understand it. Credit and debit spreads are EXACTLY the same thing. I went into a long diatribe on this before I deleted it and don't feel like writing it again. LOL.

This is why I prefer to have these conversations in person vs the net. It's much easier to communicate. LOL.

I went on a long spiel about how I think it's in our genes to be self destructive. I used an example of gay men having unsafe sex. They are going after the whole instant gratification thing knowing that somewhere down the road they will meet their grim reaper. This is mery much akin to the option credit trader who needs the assurance of small profits month after month knowing that they too could meet their demise down the road. Of course as a society we see this everywhere. We see it in our addiction to popping pills, over eating, smoking, unsafe sex, gambling, we have a pre-disposition to destroy ourselves and that carries over to our trading.

I also asked you some questions as far as why we should assume a debit trader has to hold his positions to expiration. I then went on a long spiel about how option trading really comes down to making probability bets. The only thing that changes is how the p&l is being distributed. But the odds never change. Every adjustment you make is simply re-distributing the p&l. That's all. Sure we call them hedges, blah, blah, blah. But those are things we tell ourselves to make us feel better. Kind of like a guy justifying his cheating on his wife by saying she is cheating too. It's all so we can feel good.

Once you start thinking about options as simply being a probability bet, you will get away from this whole credit vs debit thing. Remember the dice game. You are paying 3.40 for the right to play and selling that right for 3.60. Very simple.
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Quote from riskarb:

Mr Subliminal speaks:

Quote from Maverick74:

Phil,

I went on a long spiel about how I think it's in our (my) genes to be self destructive. I used an (personal) example of (wonderful!) gay men having unsafe (w/o chaps) sex. They (me) are going after the whole instant gratification thing knowing that somewhere down the road they will meet their grim reaper (dreamboat).
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LOLOLOL
 
I was bored so I started looking at June options. I know, I know it's a bit premature, but my strategy is gravitating more and more towards bear calls and away from bull puts. So, given the IV skew, if I want to keep bear call premiums up, I have to at least look at putting the positions on somewhat earlier. We're 8 weeks out.

Anyway, the point of the post is that the strikes are pretty thin, so I called today to have them add the following:

June 1380, 1385, 1390, 1395

We'll see if they get added tomorrow or Monday.
 
Quote from andysmith:

So Maverick, basically what you're saying is:

Gay Sex = Credit Spreads

What other options positions do you like? Besides credit spreads, I mean.
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Andy, most of the people on this thread are not understanding my argument. It's not a function of what I like or dislike. I am simply stating that people are making a case for something that does not exist. I don't have any preference to debit or credit spreads. They are the same!!!!!!!

I just think it's funny that people think they are long theta on a .40 credit spread 60 pts OTM. LOL.

Or the idea that if you are long a debit spread 60 pts OTM, that you are short theta and your position is bleeding. LOL.

Maybe Cory could jump in and give us his two cents. He likes to trade condors. :D
 
Quote from Maverick74:

Andy, most of the people on this thread are not understanding my argument. It's not a function of what I like or dislike. I am simply stating that people are making a case for something that does not exist. I don't have any preference to debit or credit spreads. They are the same!!!!!!!

I just think it's funny that people think they are long theta on a .40 credit spread 60 pts OTM. LOL.

Or the idea that if you are long a debit spread 60 pts OTM, that you are short theta and your position is bleeding. LOL.

Maybe Cory could jump in and give us his two cents. He likes to trade condors. :D
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I totally agree with you Mav. To me, there is a mental difference between the OTM credit spread and OTM debit spread. With the credit spread if things go well you don't have to make any decision on where to take your profit (you start out with the max). With the debit spread you have to make a decision to take a profit or hold on for more. Of course, either way credit or debit you enter your trade with a plan and follow it so you have made your decision in advance so to say.

ryan
 
Phil,

Just a quick follow-up... diagonal.

Holding your position, as suggested earlier, based on risk/reward and past monthly performances bouncing off channel support, would have profited nicely on a percentage basis these past two days.

Just a side note:

I'm trading diagonals into increasing volatility. Your first experience and preceeding comments appear to be directed more toward time decay..... or assimilated closely to a credit spread position.

I'm looking at time decay as a bonus, but not the directive for the position.

Hope that made sense
 
Optioncoach:

I have a question about risk and how you manage it.

You posted on April 13 your position on 500 SPX 1215/1225 bull credit spread. SPX closed at 1289 on that day.

Then significant event occurs. S&P only has to drop 5.7% for your position to be negative almost 0.5M.

How is this risk managed?
 
Side Note,

This months 'straddle' positions were very profitable.... most notably and thanks to the California Fed Governor.

Is anyone else heavily involved in short term straddles?

Murray
 
Quote from DonnaV:

http://online.wsj.com/article/SB114550097877130828.html?mod=home_whats_news_us

VP an interesting article in wsj abt HF managers who set up mathmatical trading models based on reversion to mean in categories as book value etc.....
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Thx Donna. however, I'm not a subscriber to the journal, could u post it or pm me with it?

Also, We're all still waiting for a photo of you and the apparent 'hot legs' of yours.
The suspense is killing us.

:D
 
I got out mainly to free up the margin since it had a profit larger then the net credit. I may get back in for a MAY/JUNE diagonal as well but just watching what the market is doing for now :)

Quote from Sailing:

Phil,

Just a quick follow-up... diagonal.

Holding your position, as suggested earlier, based on risk/reward and past monthly performances bouncing off channel support, would have profited nicely on a percentage basis these past two days.

Just a side note:

I'm trading diagonals into increasing volatility. Your first experience and preceeding comments appear to be directed more toward time decay..... or assimilated closely to a credit spread position.

I'm looking at time decay as a bonus, but not the directive for the position.

Hope that made sense
More...
 
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