SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Also, I believe IB charges if you change orders, but I'm not sure how much. I change my orders a lot, if I'm not getting filled. So that's why I use ToS and OX.
Quote from Aardvark:
Commisssions are only one part of a broker. Service, fills and in general the confidence you have in them being a partner in building your wealth.......priceless(I like Thinkorswim)
I was going to let it go but now i feel i must give you a piece of my mind
rdemyan, please dont take this the wrong way. If what i am saying comes out as an attack, i am sorry, these are not my intentions. Now that this is out of the way let me get to my response.
By putting on that trade, you said it agreed with my hypothetical rules i made up the other day. I am glad someone is atleast considering what i am saying
However, you dismissed the MOST IMPORTANT one, the entry. Let me put it this way. The way you trade the bear call spread strategy WILL lose you money over the long term. I have no doubt in my mind. It is def a -expectancy strategy when used the way you do it. The entry is perhaps the one thing that might perhaps push that strategy from -expectancy to +expactancy. Whether you believe in TA or not is irrelevant, TA has nothing to do with this. Entering at the lows will lose you more money than if you would enter at the highs, thats a FACT. If you don't believe me then you can back/front/paper test it for yourself.But let me put all that aside for a second. Let's say that you did manage to guess it right this time and this is one of those statistical times when your spread won't be ITM. It gets worse from there. Let's talk about the reason you opened the position. It is my opinion, and correct me if i am wrong but you opened that spread today because you believe the market is breaking down. Based on the the recent selloff you have a strong conviction that the market will continue to drop and not reach the recent highs much less exceed them or threaten your position. In light of that, you want to grab this position now while you still can for that credit. Perhaps, you are considering completing an IC when the market continues down. Now this is a cliche i know, but I've been there and believe me when i say this is not the frame of mind you want to be in when you open low r/r positions. I'd take a missed opportunity over lost cash any day and thats on high r/r positions. Market opportunities will always be there, your cash will NOT.
To sum this up you are taking a -expectancy trade and making it worse(entering bear calls at lows after a selloff) while relying on an emotional preference/expectation(grab the credit while you still can).
If you find this out of line, just say so and i will not say anything next time.
IB charges .75 per option contract with $1 minimum. Cancelation/modification fees can be an issue if you like to change/cancel orders alot and dont trade size >20. Interest on cash is one of the highest i've seen, so for those who keep large cash balances it's def a plus.
Been with them for 5 years.
Been with them for 5 years.
I take no offense at your comments.
But let me just say the following things:
1) I've been trading spreads for 14 months, I believe you've been trading for 10+ years. Obviously I have a learning curve to go through and hopefully will establish a better system for entering spreads. I'm sure you went through a similar learning curve as most have.
I think I've made a good start for me (not for others) with my overall strategy as I mentioned in earlier posts. But timing of entries is something I do want to work on.
2) BUT, I'm not sure that timing the entry is as critical for FOTM as it is for your strategy. Of course, if you can sell a bear call at the top that's great. But if I could predict markets with that degree of accuracy, I wouldn't be trading spreads, now would I. There would be a lot better vehicles for me to make a ton of money if I had that ability.
3) In the end, if this particular spread expires worthless I'll be content. Still, having said that, that doesn't mean I don't want to improve my trading skills. Ascertaining how the market will move after news events is something I need more experience with. If you read enough newsletters, etc. you can find opinions that are divergent yet seem to provide credible support. I follow a group of experienced day traders and the market moves of the last year or so have often confused them. Can I expect to do much better?
Your entry method (within 5 to 10 points of the 3 month high) means you could easily be out of positions for a number of months during the year. I tend to be in positions during every month. If I get it close to right, I could easily make more profit than with an absolute, line-in-the-sand strategy that you would employ (only because you wouldn't be in each month). OTOH, I believe your entry method is safer and would subject the trader to less distress over the course of the year. But it's all hypothetical. We wouldn't know unless we actually tried it.
Comments, constructive criticism is appreciated. I don't consider myself an experienced trader or an expert in any way. I report my trades as part of the thread and don't mind feedback. From my point of view it's ultimately about making more money for me and if suggestions and constructive criticism can help then that's great.
EDIT: Oh yeah, I do occassionally regret encouraging you to join the thread and post your trades and methods.
Just kidding.
But let me just say the following things:
1) I've been trading spreads for 14 months, I believe you've been trading for 10+ years. Obviously I have a learning curve to go through and hopefully will establish a better system for entering spreads. I'm sure you went through a similar learning curve as most have.
I think I've made a good start for me (not for others) with my overall strategy as I mentioned in earlier posts. But timing of entries is something I do want to work on.
2) BUT, I'm not sure that timing the entry is as critical for FOTM as it is for your strategy. Of course, if you can sell a bear call at the top that's great. But if I could predict markets with that degree of accuracy, I wouldn't be trading spreads, now would I. There would be a lot better vehicles for me to make a ton of money if I had that ability.
3) In the end, if this particular spread expires worthless I'll be content. Still, having said that, that doesn't mean I don't want to improve my trading skills. Ascertaining how the market will move after news events is something I need more experience with. If you read enough newsletters, etc. you can find opinions that are divergent yet seem to provide credible support. I follow a group of experienced day traders and the market moves of the last year or so have often confused them. Can I expect to do much better?
Your entry method (within 5 to 10 points of the 3 month high) means you could easily be out of positions for a number of months during the year. I tend to be in positions during every month. If I get it close to right, I could easily make more profit than with an absolute, line-in-the-sand strategy that you would employ (only because you wouldn't be in each month). OTOH, I believe your entry method is safer and would subject the trader to less distress over the course of the year. But it's all hypothetical. We wouldn't know unless we actually tried it.
Comments, constructive criticism is appreciated. I don't consider myself an experienced trader or an expert in any way. I report my trades as part of the thread and don't mind feedback. From my point of view it's ultimately about making more money for me and if suggestions and constructive criticism can help then that's great.
EDIT: Oh yeah, I do occassionally regret encouraging you to join the thread and post your trades and methods.
Just kidding.
Quote from rallymode:
I was going to let it go but now i feel i must give you a piece of my mind
rdemyan, please dont take this the wrong way. If what i am saying comes out as an attack, i am sorry, these are not my intentions. Now that this is out of the way let me get to my response.
Nice trade today... Beautifully done! Put a little too much emphasis on the RSI this month for the bull put and didn't wait for my stochastic confirmation.
For May I have:
1340/45 @ .55
1350/55 @ .40
1280/70 @ .5 (bought at 1310)
129/128 debit spread for a hedge on the 1280...not ideal as I would like to give both the hedge and the spread chance to finish ITM. However given the action on Friday was left little options...
For JUN I am positioned with a call spread at 1375/1380 @ .5....got in with stoch. confirmation right b/f the sell-off. Looking now for a Jun 1240/35 to complete the IC, for .5 or better. Will also keep a close eye on this bounce...if it's weak, may wait for the second wave down b/f placing the bull put.
And your time?
For May I have:
1340/45 @ .55
1350/55 @ .40
1280/70 @ .5 (bought at 1310)
129/128 debit spread for a hedge on the 1280...not ideal as I would like to give both the hedge and the spread chance to finish ITM. However given the action on Friday was left little options...
For JUN I am positioned with a call spread at 1375/1380 @ .5....got in with stoch. confirmation right b/f the sell-off. Looking now for a Jun 1240/35 to complete the IC, for .5 or better. Will also keep a close eye on this bounce...if it's weak, may wait for the second wave down b/f placing the bull put.
And your time?