SPX Credit Spread Trader

[rallymode]

Quote from rdemyan:

Pi:

Your strategy seems to have gotten less risky in that you are now proactively putting on hedges, whereas, I believe you didn't use hedges before. I like the way you're setting yourself up, ahead of time, for future bear call spreads by proactively buying SPY hedges when they are cheap.

I see no/little merit in putting on hedges proactively unless you actually put on the hedge the day you open the credit spread.

In the IC example, if you are going to wait until one side moves against you so that you can put on a cheap hedge to protect the other you might as well not hedge at all. Let's not even talk about the directional risk, at the least you are getting cheated on the b/a spread every time you open/close/reopen hedges which adds up considering the price level of SPY options.

just my two cents.

 

[El OchoCinco]

Not that there is anything wrong with that... (Seinfeld)...

I like em volupty too (my perfect body is Beyonce...)

But JA..... whew..... what can I say...

Like this is relevant but hey.. its Friday

Quote from rdemyan:

Well, even I have to say: Wow!

EDIT: Just a clarification for the new people. I'm not the biggest JA fan because I like more voluptuous women. It's not because I'm, well you know.....

 

[rallymode]

Quote from optioncoach:

Market is really getting bukakked in the ass today lol

 

[cdowis]

I had a Jun 1280/1250 SP bull put spread but liquidated it. 1360/1380 call spread.

Was at break-even yesterday and down 250 ticks today. Just following my plan.

 

[rdemyan]

My strategy is gravitating towards credit call spreads only (obviate black swan risk). Given that scenario, it will increase my comfort level to hedge my risk since I will no longer have bull puts to help bring in income when my bear calls are potentially threatened. Under that assumption, it makes sense for me to try and minimize those hedgin costs and one option is to consider proactive hedges, when those hedges are cheap. There are other options such as perhaps buying a hedge that expires in the far months that will cover the near months as well. Of course, no one really knows what will happen to the SPX in the future. What seems cheap today, may not be tomorrow or OTOH may have been a very smart move.

Appreciate the comments because I am a firm believer in always questioning my strategy. However, what makes sense to one person may not be sensible to others. One thing this forum shows over an over again is how each of us has our own unique strategies that suit our requirements: financially, logically and yes, emotionally (ability to sleep at night).

Quote from rallymode:

I see no/little merit in putting on hedges proactively unless you actually put on the hedge the day you open the credit spread.

In the IC example, if you are going to wait until one side moves against you so that you can put on a cheap hedge to protect the other you might as well not hedge at all. Let's not even talk about the directional risk, at the least you are getting cheated on the b/a spread every time you open/close/reopen hedges which adds up considering the price level of SPY options.

just my two cents.

 

[piccon]

Hey,

It's people money I am using. I close the PUT and I use the profit to open the SPY call. I can do several thing with it:

1) It can stay there and be profitable by itself

2) If Market bounces I can open a call spread and it will be used as hedge

3) I can sell the 135 calls (if bounce) , I can sell SPY135 and turn it into depit spread and then open call spreads above 1350.

4)If there is no movement, I can just close it and get my money back.

The possibilitis are endless.

Rally,

I see some merit: I did open SPY 129 as potential hedge for bull put; I didn't open any bull put but I get 100% return of my SPY 129.

If something is working, I don't care if the logic behind it is good or no.

MHO

Quote from rdemyan:

Pi:

Your strategy seems to have gotten less risky in that you are now proactively putting on hedges, whereas, I believe you didn't use hedges before. I like the way you're setting yourself up, ahead of time, for future bear call spreads by proactively buying SPY hedges when they are cheap. My approach has been more reactive in putting on the hedges, but I can certainly see the merit of being proactive.

 

[Sailing]

coach,

Diagonal Update:

Our May/June Put Diagonal has far exceeded profit expectations. The 1265 short hopefully will expire worthless... and original $1.60 June Put is now pushing $4.00 Amazing how this volatility trade differs from the credit spread position.

The June/July Put Diagonal opened three days ago has now been converted into a free butterfly.

As we discussed earlier, I really like the idea of placing this position on low volatility.

Securities can move in unlimited directions, but volatilility is range bound.... which makes it a whole lot easier to trade.

thanks go out to Maverick and Riskarb for their enlightment!

M~

 

[rallymode]

Quote from piccon:



Rally,

I see some merit: I did open SPY 129 as potential hedge for bull put; I didn't open any bull put but I get 100% return of my SPY 129.

Bear with me for a moment here. Hear me out.

You open the SPY 129 as an individual trade on its own which you "may" turn into a potential hedge after a selloff. Now thats your reasoning right?

Nowthe selloff came and you made 100% profit on that trade, the profit is there for the taking. For the sake of your bull put spread strategy, the put hedge isnt cheap anymore, it costs whatever it costs today. Using the hedge here as a part of the bull put strategy isnt any more beneficial than closing the puts taking the profits.

If it's working for you then by all means keep doing it, who am i to tell you otherwise but i notice that many people are intermixing the two trades and pulling out the positives but overlooking the negative effects.

 

[scienter]

Piccon,

Still holding it b/c I do expect a bounce. I clearly pulled the trigger a bit fast on it. I based my entry of RSI (3) at 20...but didn't wait for the OS stochastic reading.... With 5 days to go and a 1rst legs of an IC in at 1340 and 1350, lots of liquidity and an medium- term uptrend in place, I felt 30 points to the downside with 5 days to go was an acceptable risk.

However, not willing to risk a black Mon. scenario, I did put a SPY debit spread hedge on using the 129/128. The strength of the bounce next week (if we get) will determine next steps.

Sci

Quote from piccon:

What are you doing with your May 1280/1270 PUT.?

It's worth $2 now. We may have some down days to go. My oscillators are not fully oversold yet. I am waiting for Monday, Tuesday to do something. I sold my SPY 129 PUT and bought some SPY 133 call as potential hedge for next week calls spreads if there is any bounce.

I already had the 1375/1385 @1.00 and is now worth nothing.

I expect a bounce Monday or Tuesday. We are getting seriously oversold shorterm

 

[El OchoCinco]

Refresh my memory or walk me through again what you did to convert your JUNE/JULY Put Diagonal to a FLY

Quote from Sailing:

coach,

Diagonal Update:

Our May/June Put Diagonal has far exceeded profit expectations. The 1265 short hopefully will expire worthless... and original $1.60 June Put is now pushing $4.00 Amazing how this volatility trade differs from the credit spread position.

The June/July Put Diagonal opened three days ago has now been converted into a free butterfly.

As we discussed earlier, I really like the idea of placing this position on low volatility.

Securities can move in unlimited directions, but volatilility is range bound.... which makes it a whole lot easier to trade.

thanks go out to Maverick and Riskarb for their enlightment!

M~