SPX Credit Spread Trader

[andysmith]

Coach, I've heard about locking the box but am still vague on the concept.

Did you mean to say "buy the 1300/1305 bull call spread" (my bear put spread was 1300/1305)?

1.80+2.00=3.80
5-3.80=1.20
1.20*100=12k

So lock it and let theta decay kick in till JUN exp?

Quote from optioncoach:

Wow, 100 spreads at $1.80 = $18,000 cost. Must have baggy jeans to support those balls .

My advice for s#its and giggles..... try and grab the 1305/1310 bull call spread for about $2.00 and lock the box for $3.80 and a guaranteed profit of $1.20 or $12,000 for a return of 66% Yawn...

Nice job..

 

[andysmith]

riskarb, I'm certain there is wisdom in your post, just wish I could understand it.... what do you mean by "offset"?

Quote from riskarb:

Why lock in a -expectancy on the box instead of offset? You can't buy the box at a better price than simply offseting the bear vertical.

 

[andysmith]

Rally, good point. I'm really wondering though, if this channel has any meaning. The breakdown in NDX is severe, I wonder if we're in for a ride to SPX=1280...

Quote from rallymode:

Considering we are already at the bottom of the channel and the size of the position i would take profits at this point. You are nowhere near a credit FLY so, I think you should offset the spread here. You can always open another position if you want to be bearish but with a better entry. Just my opinion.

 

[El OchoCinco]

I did not realize these were JUNE spreads. I thought you were playing a short-term dip in the market. The box is an alternative if you think you can get a better fill on the bull call spread that is OTM than closing the ITM bear put spread. Have to compare the two but with SPX the OTM spreads often have tighter spreads relatively.

BUt since this is JUNE I would not box it up to JUNE, I thought you were looking for one more week.

WHen riskarb says offset he means close the position outright.

Quote from andysmith:

Coach, I've heard about locking the box but am still vague on the concept.

Did you mean to say "buy the 1300/1305 bull call spread" (my bear put spread was 1300/1305)?

1.80+2.00=3.80
5-3.80=1.20
1.20*100=12k

So lock it and let theta decay kick in till JUN exp?

 

[andysmith]

riskarb, why are the SPX spreads ridiculous?

Quote from riskarb:

The otm bull vertical is nearly as wide as the itm bear. Ridiculous spreads on SPX, absurd.

 

[rallymode]

Quote from andysmith:

Rally, good point. I'm really wondering though, if this channel has any meaning. The breakdown in NDX is severe, I wonder if we're in for a ride to SPX=1280...

well it only has a meaning in retrospect so i dont know what to tell ya

however, since you seem to be considering the NDX as an indicator then it is getting close to some serious support so i dont know how much further downside there is unless some bad news comes out.

if we are in for a ride to 1280 then fine, you will miss an opportunity if you close now for a small profit, but what if a bounce back hard here?

just something to think about.

 

[riskarb]

Quote from andysmith:

riskarb, why are the SPX spreads ridiculous?

220x480 on a 5-wide SPX vertical? Yes, I call that absurd. That was the market in the 5/10 put bear spread when I looked at it this morning.

 

[andysmith]

Coach, why would you not box it up to JUN?

My inclination is to keep the position and wait and see, I expect SET to be lower than it is now, by JUN exp.

Quote from optioncoach:

I did not realize these were JUNE spreads. I thought you were playing a short-term dip in the market. The box is an alternative if you think you can get a better fill on the bull call spread that is OTM than closing the ITM bear put spread. Have to compare the two but with SPX the OTM spreads often have tighter spreads relatively.

BUt since this is JUNE I would not box it up to JUNE, I thought you were looking for one more week.

WHen riskarb says offset he means close the position outright.

 

[andysmith]

riskarb, yes it is ridiculous because it's so wide, but I meant to ask "why are the MMs making the spreads ridiculously wide"?

Quote from riskarb:

220x480 on a 5-wide SPX vertical? Yes, I call that absurd. That was the market in the 5/10 put bear spread when I looked at it this morning.

 

[momoneythansens]

Boxing is the same as closing (offsetting) the spread. You lock in any profit or loss on the spread you had. There is no benefit to it outside of negligible fill issues - and is normally more benefiial done the otherway around e.g. you had an ITM debit spread that you wanted to close...but because of the slippage, you might choose to box it with an OTM credit spread instead. Oh and there is Pin risk too.

I would point you to where I discussed this in detail earlier in the thread but I'm on my PDA so can't be bothered!

It's all in Cottle

MoMoney

Quote from andysmith:

riskarb, I'm certain there is wisdom in your post, just wish I could understand it.... what do you mean by "offset"?