SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
You should see a bad Trading platform (Ameritrade).
I have been with them for the last 6 years. I never traded options until last July. So trading Stocks and simple options are easy to be done. I negotiated 8$ trade + 0.75 per contract.
But When I started doing Credit Spreads I got sick of it.
1)Their system doesn't recognize condor; after you place the Call spread, if you wantr a condor, you have to call them and sometimes you missed moves.
2) When you place an spread order, if you want to change your premium, you can't replace, you have to cancel and place a new order. I got so frustrated.
I still have the account there with 20K available for options. I have been using it only to trade OEX and I place bulk order for 15k or 20k at a time and I call later to do the condor. I am looking forward to move that money somewhere else so I can have full control over my trades (cancel, replace, add, condor). I hate TDAmeritrade for options. If you want to do straight buy (PUT, Call) it's ok.
With OX, as long as I have margin, I don't even need to call them.
So when you are used to bad things, anything better is perfect to you until you get things even better than what you thought was (better). That's why I am trying to get info on TOS.
I have been with them for the last 6 years. I never traded options until last July. So trading Stocks and simple options are easy to be done. I negotiated 8$ trade + 0.75 per contract.
But When I started doing Credit Spreads I got sick of it.
1)Their system doesn't recognize condor; after you place the Call spread, if you wantr a condor, you have to call them and sometimes you missed moves.
2) When you place an spread order, if you want to change your premium, you can't replace, you have to cancel and place a new order. I got so frustrated.
I still have the account there with 20K available for options. I have been using it only to trade OEX and I place bulk order for 15k or 20k at a time and I call later to do the condor. I am looking forward to move that money somewhere else so I can have full control over my trades (cancel, replace, add, condor). I hate TDAmeritrade for options. If you want to do straight buy (PUT, Call) it's ok.
With OX, as long as I have margin, I don't even need to call them.
So when you are used to bad things, anything better is perfect to you until you get things even better than what you thought was (better). That's why I am trying to get info on TOS.
Piccon:
I trade with OX and TOS.
But, I like TOS much better because:
1) Its easier/faster to see the option chains. any month, and widths. Faster/Easier to create/modify and execute a trade.
You get the mids. Not with OX.
2) Great probability analysis and risk profile graphs. You can see the P/L graphs of possible adjustments before you make them. Much better than OX.
Also, their Theo Price lets you compare a future theoretical price of a position vs. the current mark, based on a change in stock price/volatility/days to expiration. Lets you do a "what-if" analysis and allows you to choose the best position for a fast/slow stock price change or +/- volatility change.
They have lots of demos to let you learn all this.
3) They are going to a new charting function (I think I prefer the existing one from Prophet Financial- same as OX). But, TOS always releases updates to their software. So their charts may end up being better. They are also going to add the capability to chart volatility (over summer, I think).
4) However if you need to access from the web only, OX is better.
I honestly don't think oil will go that much higher...right now supply is not the issue they "say" its the conversion to ethanol which is complete BS as we do this EVERY year! No one expects Iran to say YES....
One more thing that hasn't been mentioned are the Wednesday chat sessions on various option topics. The presenters esp. Tom are very knowledgable and you can look at transcripts from all of these sessions going, I believe, at least several years back. Plus I would bet that there is a lot more with regards to education that I don't know about, but perhaps others will enlighten us.
Coach:
I was thinking about some of these really FOTM strategies. Running through a few numbers and let's ignore commissions for now.
But if one were to place only bear call spreads (so as to avoid a possible black swan event) and if one received only $0.25 for a 15 point spread, the monthly return would be 1.67%. Since these spreads are really FOTM, 100 or more points to the short strike, it should be possible to earn an annual return of 20%.
As I understand it, that's pretty much within your parameters (and mine for that matter). So why not trade this way??
EDIT: I admit that I am addicted to higher returns, but this might be a good strategy for my retirement account. Including commissions and assuming no adjustments would give a yield of 18% annually.
I was thinking about some of these really FOTM strategies. Running through a few numbers and let's ignore commissions for now.
But if one were to place only bear call spreads (so as to avoid a possible black swan event) and if one received only $0.25 for a 15 point spread, the monthly return would be 1.67%. Since these spreads are really FOTM, 100 or more points to the short strike, it should be possible to earn an annual return of 20%.
As I understand it, that's pretty much within your parameters (and mine for that matter). So why not trade this way??
EDIT: I admit that I am addicted to higher returns, but this might be a good strategy for my retirement account. Including commissions and assuming no adjustments would give a yield of 18% annually.
Find me $0.25 100 points OTM on calls for MAY 
or In June even...
or In June even...
Ahh now we are at 80 points in 2 months. SPX moved about 100 points from OCT 05 lows to DEC 05 highs.
Nothing is a given really. Calls may not be subject to black swan crashes but they are still at risk for strong rises, especially over 2 months.
Moreover, if you only do 2 month spreads, you will only have about 6 positions in a year, which cuts that 18% return in half before commissions and not counting a potential adjustment.
All I can say is it is hard to generalize an approach with this strategy. Drops are more of a panic and fear than rises but both still present risks. The more time you add the more time for the market to move against you.
You could certainly stick with calls but the IV skew works against you a bit in trying to go deep OTM. Makes it harder to go 100 points OTM like puts but then market drops can be quick and severe with puts. It is a trade off where no cookie cutter can be applied.
Nothing is a given really. Calls may not be subject to black swan crashes but they are still at risk for strong rises, especially over 2 months.
Moreover, if you only do 2 month spreads, you will only have about 6 positions in a year, which cuts that 18% return in half before commissions and not counting a potential adjustment.
All I can say is it is hard to generalize an approach with this strategy. Drops are more of a panic and fear than rises but both still present risks. The more time you add the more time for the market to move against you.
You could certainly stick with calls but the IV skew works against you a bit in trying to go deep OTM. Makes it harder to go 100 points OTM like puts but then market drops can be quick and severe with puts. It is a trade off where no cookie cutter can be applied.