SPX Credit Spread Trader

[nlslax]

Quote from ryank:

I'm having way to much fun on this board and learning a lot about a new strategy (to me) from you so please keep typing . Between you and Cache, I am just about converted to the near the money 5 point spreads .

I hear ya.

To experiment, I did 3 different XEO 5 pointers within the past 60 days ~2% OTM as opposed to ~4% which I had done previously. One of the aspects I like is the credit when I have an IC, is 40-60% of the spread. As opposed to 5-15% of the amount at risk. I've tended to hold the position longer if the market moved towards my short strike. But not to the point of getting run over - yet.

Not proficient yet, but I'm more liking the closer to the money spreads. Will keep workin on it.

PS - Was tempted, but didn't put any on credit spreads yesterday.

 

[momoneythansens]

LOL. Still trying to figure out what's going to happen to your SPY bear put spread? Hehehe....

Well I could mention that it's probably best to know what you're trading before you get into a position, but that would be no help now would it!

Besides, I have one such rant prepared earlier. Despite being cringeworthy, still relevant today especially in the light of recent correction!

Actually, some of the SPY contract specifics were discussed just couple of days ago.

SPY trades on Friday with PM settlement based on closing price of SPY. So there is risk of whipsaw on your SPY hedge e.g. if SPX settles lower but then we trade higher on Friday and you didn't close your hedge, you will end up losing some of the hedging benefits. It's a bit of a gamble.

Better to use XSP IMO as it trades identically to SPX and is cash settled so you don't have to worry about pesky SPY stock being put or otherwise.

Good luck!

MoMoney.

Quote from piccon:

Does Spy trade expiration Friday?

 

[El OchoCinco]

Mainly I have no access to VBI futures so looking to the calls for a surrogate.

So far they have operated as expected. The MAYs did not move on the VIX jump yesterday because they no longer existed. But the JUN did move $0.50 or so. Wish the move would have occured before MAY expiration to see how they would have moved as well...

Quote from riskarb:

Unfortunate. The VBI futures are up almost $2k per car since you bought those calls. May want to consider the futures next time as they usually trade at VIX cash or a slight discount.

 

[Aardvark]

Quote from Heatheranderson:

Bear call on 4/24/2006
Bull Put on 5/12/2006

ok...I think we all need to be very careful putting on a bull put so close to exp. Based on my short time of experience on the spx (9mos) the week prior to and week of exp are the most volatile. A great time to put on the NEXT month spreads. In spite of support/resistance and all other charting TA the market will try to shake you out of your positions. It ALWAYS goes higher than you THINK it will and LOWER than you think it will so that would be my only thought. We have all done panic moves and thats what the market counts on and I dare say we will in the future...after all we are just human (except for me:eek: )

I think you are brave to share and NO one can throw stones...we unfortunately learn best from our own mistakes, however if we are really smart we will understand that what happened to you can and will happen to any one of us.

 

[ryank]

Quote from nlslax:

I hear ya.

To experiment, I did 3 different XEO 5 pointers within the past 60 days ~2% OTM as opposed to ~4% which I had done previously. One of the aspects I like is the credit when I have an IC, is 40-60% of the spread. As opposed to 5-15% of the amount at risk. I've tended to hold the position longer if the market moved towards my short strike. But not to the point of getting run over - yet.

Not proficient yet, but I'm more liking the closer to the money spreads. Will keep workin on it.

PS - Was tempted, but didn't put any on credit spreads yesterday.

I paper traded a May 1335/1340 call spread that obviously did well so I closed it out the other day for peanuts. I am now looking at a June 1240/1245 put spread to see what that might be like.

 

[momoneythansens]

2 cents as requested: Hedging Strategies. Suggest you read a few posts before the one linked to to get the context.

You get paid a credit for taking on risk. Can't entirely mitigate the risk without also mitigating the credit!

Good luck and commisseration's on your first month.

Quote from scntaxpro:

Here are a few things I've been mulling over in my head and I would be most grateful if the experienced traders on this forum would offer their 2 cents.

 

[nlslax]

Quote from ryank:

I paper traded a May 1335/1340 call spread that obviously did well so I closed it out the other day for peanuts. I am now looking at a June 1240/1245 put spread to see what that might be like.

I forgot to add that my best results were when I started the trade ~ 6 weeks out and closed it a before expiration.

Been doin more calenders lately.

 

[momoneythansens]

If in doubt do half

Quote from Heatheranderson:

Aardvark
I am aware of my emotion HOPE and thats what i was trying to explain to Rallymode. I got an oppertunity on tuesday and wednesday to close it out at $1.80 but ...

 

[El OchoCinco]

Lots of interesting comments, will chime in soon...

 

[momoneythansens]

Quote from Aardvark:

OK folks we have 30 days till June. The beginning of the year we were....whoo hoo...yippie...up...up...up...

I'm still waiting for that Santa Claus rally to come around...LMAO.