SPX Credit Spread Trader

Quote from DonnaV:

Have they said if/when they will have a video on he new TOS charts?
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I haven't heard. I've messed around a bunch with them. In some ways I like them, in others I still prefer the prophet charts.
 
Quote from Cache Landing:

New software update includes a lot of stuff. Check out the e-mail that you should've received yesterday.

{edit} In short, it allows you to tie a ticker to multiple functions so that you can jump from one ticker to another without having to enter the ticker on each different page. IOW, you can link AAPL to the red tab and when you click it, you should be able to jump from the trade tab, to the analyze, to the charts, and AAPl will be displayed in all of them.
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Darn spam filter, it ate the email from TOS. I found it though, thanks for the heads up.
 
Pic...I'm bored too today...its either this or laundry and house cleaning:(

Interesting discussion on the trading thread...going from pit to screen...The traders are complaining that because they aren't on the floor where there is noise they don't have the same "feel"..some even subscribe to "pit noise". I guess this is similar to what I'm saying when I use my senses and trust my senses.
 
Quote from andysmith:

Rally,

So you're saying that some benchmarks need to be established, such as 10-pt spread, 27 days to exp, 60 pts OTM,... should give $xyz credit?
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Yes, since we are talking about using SPX credit spreads here to bring in income consitently month after month. It is my impression that this what people here are doing and that's who my comment was addressed at.

If your goal is to consistently bring in income month after month, it only makes sense to try and systemize your entries and stick to it. The less discretion(outside of discretion allowed by your system) the better. So if you are going to systemize your entries then you must consider the credit received vs the risk at hand, and the strike selection as it relates to the market price. Lastly, but not least, your position size which should be consistent with your max risk per trade .

I am not advocating people follow what i do. Whether you go ATM, OTM or FOTM, an optimal entry does exist when you factor in all these variables which if followed will give you consistency and in my opinion significantly reduce your risk over the long haul. I see very little of that in this thread when you consider the large amount of risk thats being undertaken by most. People seem so in love with the credit they "collect" that they either overlook the other side of the equation or seriously under weigh its importance with regards to the consistency i am talking about.

I will end this with this comment - just because something works now doesnt mean it will always work. The longer it works, the closer you get to its END, What price are you paying to find out when that actually is?
 
Rally,

I am not smart enough to understand the big options concepts. I don't know why I should put my trade at the same strike for the same price 5 days ago instead of today.

Me I trade base on oversold/overbought and i am here for the bucks not for the big options knowledge.



Quote from rallymode:

I dont want to be the black sheep of the thread but it sounds like many people on this thread use too much discretion when it comes to entries and credit sought. What i mean by that is, once you see the credit you seek you put more weight to the credit "collected" and less weight to its relation to the underlying and time to expiration.

You guys probably dont see it now but if you measure your results over a 12-24 month period you will probably do alot better if you systemize your entries based on optimal credit as it relates to the current price and time to expiration for the max risk at hand.

An example of what i am talking about is this:



You could've gotten that same credit at half the risk just 5 days ago.

I hope i am not offending anyone with this statement but its an observation that has bothered me for some time now. Afterall, it's your money.
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I agree with your message. Making a process more systematic (and therefore more measurable) can only lead to good things.

If I had the time, I'd volunteer :( but I don't... perhaps someone can capture a table or spreadsheet with some benchmarks for credit spreads?


Quote from rallymode:

Yes, since we are talking about using SPX credit spreads here to bring in income consitently month after month. It is my impression that this what people here are doing and that's who my comment was addressed at.

If your goal is to consistently bring in income month after month, it only makes sense to try and systemize your entries and stick to it. The less discretion(outside of discretion allowed by your system) the better. So if you are going to systemize your entries then you must consider the credit received vs the risk at hand, and the strike selection as it relates to the market price. Lastly, but not least, your position size which should be consistent with your max risk per trade .

I am not advocating people follow what i do. Whether you go ATM, OTM or FOTM, an optimal entry does exist when you factor in all these variables which if followed will give you consistency and in my opinion significantly reduce your risk over the long haul. I see very little of that in this thread when you consider the large amount of risk thats being undertaken by most. People seem so in love with the credit they "collect" that they either overlook the other side of the equation or seriously under weigh its importance with regards to the consistency i am talking about.

I will end this with this comment - just because something works now doesnt mean it will always work. The longer it works, the closer you get to its END, What price are you paying to find out when that actually is?
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I agree that the Probability of Touching is more useful then the Probability of Expiring when it comes to defending our positions - or at least sounds like it should be. However I still use POE when putting on and adjusting my positions just because I am used to it. I have found that the POT is about (roughly) twice what POE - especially out of the money.

Once I find something that works I tend to stick with it. I have been very happy with TOS probability calculations thus far. I should note that I am using the probability listed on the Trade page and not the Analyze page when looking at this, as they are calculated slightly differently.

I also am not a big fan of the "Black Box" approach. I (if push came to shove) could calculate the POE on my own. I wouldn't even know where to start to calculate the POT.


Quote from Cache Landing:

Just a quick question for all you TOS fans out there. I find myself using the "probability of touching" function frequently, rather than the "probability of expiring".

While the premium for these credit spreads is based more on POE, it seems that the adjustment strategy for most on this thread is to adjust long before the short strike has been breached. In this case, I find the POT function to be much more helpful. What's everyone else's view on it?
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Agreed, some folks defend their position more akin to no-touch exotics in which case probability of touching seems more appropriate.

Quote from Cache Landing:

Just a quick question for all you TOS fans out there. I find myself using the "probability of touching" function frequently, rather than the "probability of expiring".

While the premium for these credit spreads is based more on POE, it seems that the adjustment strategy for most on this thread is to adjust long before the short strike has been breached. In this case, I find the POT function to be much more helpful. What's everyone else's view on it?
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Apologies, didn't intend to throw your contribution back in your face :)

Here is an unrestricted/summarized version of the article by John that doesn't require registration:

http://www.investopedia.com/articles/optioninvestor/03/100103.asp

I'll try and dredge up from the depths of my memory why the statistics presented by John in that article are misleading and not really "valuable info". Until then...

Quote from ChrisM:

To make long story short I am enclosing this material.

There is no point to continue that discussion as it went into dead end (in my opinion), but whoever knows how to use valuable info properly may take advantage of enclosed article.
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