It's a fair question, but I can't give you a 100% logical answer based on technical analysis.
The trade meets my credit requirements and the short is 65 points OTM. Now, to be clear, this is a trade that I put on using my own criteria.
But for grins, let's look at a post you made on 5/12/06 regarding FOTM spreads.
In that post you said the following:
1) The only thing I would trade is bear call spreads.
1) I would open front month spreads 4 - 5 weeks out. We are currently 31 days from expiration in June.
2) I would go 65 to 70 points OTM. My position today was 65+ points out when initially placed.
3) "try to get $0.5 or better on a 10 pointer". That would equate to about $0.75 or better on a 15 pointer (assuming equal ROM). I got $0.70.
EDIT: It is true that this trade comes far from meeting one of your major criteria: "enter trades when the SPX is at/within 5-10 points of the 3-month high".
Still the trade I placed meets or comes very close to meeting much of your criteria [except for that very important point 3)] for entering an FOTM spread (which I know you don't trade).
But I placed this trade to meet my criteria and it was not based on what you posted. I expect the market to trade in a neutral range or down and also I'm not the biggest fan of using technical analysis only to open positions in today's trading world.
Quote from rallymode:
rdemyan,
why enter a bear call spread after a huge selloff? Any particular reason you decided to open it today and not last wed after the fed said more hikes to come? I really am trying hard to understand some of the logic behind some of the entries i see posted but i keep coming up empty. These strategies that we all do already have -expectancy, why some people try to make that even worse is beyond me.
