Unbelievable!
Coach,
Can it go on the yahoo mailing list, or is that prohibited too?
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Unbelievable!
Coach,
Can it go on the yahoo mailing list, or is that prohibited too?
Mod's must have some new directives. I posted some info from another site on a different thread. Was told since that site was not an advertiser, I should not post their info.
As you said, it's their playground and their rules.
Can't complain much; ET is still the best I've found for what they do.
Murray is talking about call diagonals. If you do a ratio call diagonal for a small credit or break-even then a black swan is no issue. If the market crashes you keep your small credit or break-even and live to trade another day. Now, there is good sized risk to the upside but there are strategies to deal with this type of move.
Ryan:
Thanks. Have you started to trade diagonals?
Also, I noticed that you're thinking about trading spreads with strikes closer to ATM. While the credits are certainly appealing and the risk to reward ratio much better than FOTM, they will require more monitoring and probably more adjustments. I don't know about you, but if my clients are in the office or I'm at their site, I can't just say: "uh, excuse me, I have to get to a computer to adjust my spreads which are being threatened by a market move." They're paying me, and they expect my full attention.
Just a thought.
Thanks. Have you started to trade diagonals?
Also, I noticed that you're thinking about trading spreads with strikes closer to ATM. While the credits are certainly appealing and the risk to reward ratio much better than FOTM, they will require more monitoring and probably more adjustments. I don't know about you, but if my clients are in the office or I'm at their site, I can't just say: "uh, excuse me, I have to get to a computer to adjust my spreads which are being threatened by a market move." They're paying me, and they expect my full attention.
Just a thought.
I paper traded an Apr/May call diagonal with good results and I'm now paper trading a June/July call diagonal that is well out of the money with the recent pullbacks. I might move to real money for a July/Aug call diagonal next month, we will see.
I don't know that the 5 point close to the money spread needs that much more monitoring than 10 point FOTM. You do need to monitor both of course. There may need to be more adjustments to the closer spread over time but you have to remember, you take in way more credit with smaller risk. Here is an example using positions I was following last week:
May 16th
10 June 1215/1225 puts, credit of $.50 = $500 with $9500 risk
May 17th
5 June 1240/1245 puts, credit of $1.20 = $600 with $1900 risk
Fast forward to quotes from this morning (not sure how accurate these premarket quotes really are so take it for what it is worth):
1215/1225 puts mid is $1.00 = loss of $500
1240/1245 puts mid is $.80 = gain of $200
Obviously the 1245 short is MUCH closer to the market than the 1225 but credit is more and risk is less. I've been looking very closely at how the close spread reacts as the market gets close to the short strike. So far it seems the "pain" is much less (i.e. more managable) than for the FOTM spreads. The market looks to be opening down this morning so I will be watching to see how the 2 positions compare with the added pressure at open.
I can't think of a profession I would be less suited to. Just the other day I nearly bought a T-shirt that read: "Do I look like a f@#%ing people person?" Murray,
Has your group looked at call diagonals using weeklys? For example May 1270/June 1320 is one I just picked out of the air. No black swan problem, liquidity looks like it stinks and is close to the money and would need some nimble adjustments on an upward move. I'm looking really hard at what happens when SPX goes above 1270 and what June call to sell to help manage the trade. It is a good mental exercise anyway.
Has your group looked at call diagonals using weeklys? For example May 1270/June 1320 is one I just picked out of the air. No black swan problem, liquidity looks like it stinks and is close to the money and would need some nimble adjustments on an upward move. I'm looking really hard at what happens when SPX goes above 1270 and what June call to sell to help manage the trade. It is a good mental exercise anyway.