SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
I have been following this journal for several months now. My first spread trade this month (1230/1240/1345/1385 IC) expired for a 6.9% return on margin. I want to thank all who have posted on this board(especially Phil) for the education I have received. Prior to this I was using an options autotrading advisory service which did not take into consideration any type of risk management and my account was slowly being churned away.
I am actually reading through this entire thread for the second time for things I missed the first time around. As far as my trading style is concerned I am trying to utilize the KISS method(Keep It Simple Stupid). Although there is a lot of information given on this thread, I am trying to boil it down to those rules of trading which I think will work for me (entry and exit points, when to hedge, etc.) which are most important for my style of trading.
Again, thanks to all!
I am actually reading through this entire thread for the second time for things I missed the first time around. As far as my trading style is concerned I am trying to utilize the KISS method(Keep It Simple Stupid). Although there is a lot of information given on this thread, I am trying to boil it down to those rules of trading which I think will work for me (entry and exit points, when to hedge, etc.) which are most important for my style of trading.
Again, thanks to all!
thx bob...what a turnaround:eek: happy I closed the put spread...before I left the house this am..nice play coach. I really think the key to good trading is the flexibility to seize on an opportunity when it presents itself even if its not your normal/routine type of trade.
Jim:
Congrats on a nice month and welcome to the board. Was your bear call really a 1345/1385 or did you mean to write 1345/1355?
Edit: If your new to trading the SPX be especially careful of the SET (SPX settlement on Friday after Thursday expiration). I wasn't even aware of this when I started trading the SPX (my bad since I should have done more research), and I was lucky back then that it didn't bite me. But I know of a couple of very experienced traders who took the SET lightly and got massacred on settlement day. It's not hard to take it into account in your trading and since your being brave and reading through this thread, Coach talked about it in length. But if you're not sure about it, be sure to ask.
Congrats on a nice month and welcome to the board. Was your bear call really a 1345/1385 or did you mean to write 1345/1355?
Edit: If your new to trading the SPX be especially careful of the SET (SPX settlement on Friday after Thursday expiration). I wasn't even aware of this when I started trading the SPX (my bad since I should have done more research), and I was lucky back then that it didn't bite me. But I know of a couple of very experienced traders who took the SET lightly and got massacred on settlement day. It's not hard to take it into account in your trading and since your being brave and reading through this thread, Coach talked about it in length. But if you're not sure about it, be sure to ask.
Actually, that would be $3,200 reward.
Reward/Risk would be 1.60/.40 = 4:1
Reward/Risk would be 1.60/.40 = 4:1
Quote from rallymode:
I was inspired by maverick and his endless banter about debit spreads, so i decided to add some variety to my boring trading as of late. So i opened the following position a few minutes ago. Yes, you guessed it right - DEBIT SPREADS
20 MAY SPY 130/128 bear put spreads for a $.40 debit.
Max RISK $800
Max REWARD $4,000 (thanx to the put side premium skew)
If a correction is in the works, now would be a good time to start.
coach -> nice call on GOOG.
EDIT: It turns out i was filled for $.35 debit. So max r/r is $700/4000
Phil,
lol Keep working the Diagonal entry. Think more about VEGA, rather than THETA or DELTA, on this entry. Position your analysis around VEGA.
Phil, did you check out the value of your April diagonal position this afternoon....
Is anyone making money trading Straddles? It's been a great earning season so far!
lol Keep working the Diagonal entry. Think more about VEGA, rather than THETA or DELTA, on this entry. Position your analysis around VEGA.
Phil, did you check out the value of your April diagonal position this afternoon....
Is anyone making money trading Straddles? It's been a great earning season so far!
Can anyone tell me how this SET value is calculated. if we leave our position based the thursday close and SET value is more than that, do we stand to lose????.
thanks
thanks
Also, did you look at JUN instead of MAY... almost the same price.
Quote from rallymode:
I was inspired by maverick and his endless banter about debit spreads, so i decided to add some variety to my boring trading as of late. So i opened the following position a few minutes ago. Yes, you guessed it right - DEBIT SPREADS
20 MAY SPY 130/128 bear put spreads for a $.40 debit.
Max RISK $800
Max REWARD $4,000 (thanx to the put side premium skew)
If a correction is in the works, now would be a good time to start.
coach -> nice call on GOOG.
EDIT: It turns out i was filled for $.35 debit. So max r/r is $700/4000
I'm sure someone else will post how the SET is calculated; it's essentially the index calculation based on the opening price of all 500 stocks in the index on Friday morning.
From the point of view of your short strikes it's the SET that matters and not the closing Thursday SPX value. So if your short strikes are breached by the SET value, you are going to lose on that position. Check out the spreadsheet I posted to get an idea of how different the SET and closing Thursday price can be.
From the point of view of your short strikes it's the SET that matters and not the closing Thursday SPX value. So if your short strikes are breached by the SET value, you are going to lose on that position. Check out the spreadsheet I posted to get an idea of how different the SET and closing Thursday price can be.