SPX Credit Spread Trader

Quote from scoobie27:

Thanks for the tip Cache. I figure as much. You say PUT credits isnt good but this quick drops should increase vols and hence the premium right ?

Rally, Im still procrastinating and havent sold my 15 wide puts yet but looks juicy. Worried if I wait SPX might pop back up and I'll go damn... should have sold :D But who knows..

My short strike is normally between Rally/Cache distance and Coach's. But this time just felt like selling FOTM as I thought the index is unlikely to fall 12.08% from the 1325 highs in roughly in the period till July. Just my rough analysis :)
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The increased vols are making for better credits, but look at the put spreads vs. the call spreads.
 
Quote from rallymode:

hey cache,

credits are actually very sweet with the vix at 20 but its the 6 weeks to expiration that concerns me.
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Yeah, it's not worth trading right now. Besides I'm in a no lose situation right now. More downside doesn't hurt at all, while a bounce helps. If we stay down in this range until wedneday, I don't think I'll close the position as I had previously planned to do.

[edit] In any case, I think this move was enhanced because of it being lunch time. Overreaction in my opinion. I still think there is a good chance that we close above 1245 for the day. Of course if I ever venture to state a bold opinion like that, I'm usually proven wrong.
 
I guess I have the following options as my short strike is about 10 point away.

1- Convert to B-Fly

Buy debit spread 1240/1225 - Costs around 5.00
sell another credit spread 1175 - 1150 to offset the cost . But Additional risk.


2 - Close the spread for a loss of 5.95


3. Wait another day to see how SPX closes on friday.

Seems like option1 is better choice. Please let me know your thoughts.


Quote from mantenar:

I have a credit spread SPX 1225/1210. Converting into B-FLY seems to be expensive. 1240 - 1225/1210. I can roll it higher . But I am not sure if I can get filled faster. Any ideas.
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Quote from Cache Landing:

I still think there is a good chance that we close above 1245 for the day. Of course if I ever venture to state a bold opinion like that, I'm usually proven wrong.
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How about this for bold, SPX 1270 before SPX 1229. :D

I am sitting on a $1 loss on my 1240/1235 at the moment and waiting to see how this plays out into the weekend and early next week. I may very well end up losing more at the end but i will take my chances here and see if stats are on my side this time around :)
 
Quote from mantenar:

I guess I have the following options as my short strike is about 10 point away.

1- Convert to B-Fly

Buy debit spread 1240/1225 - Costs around 5.00
sell another credit spread 1175 - 1150 to offset the cost . But Additional risk.


2 - Close the spread for a loss of 5.95


3. Wait another day to see how SPX closes on friday.

Seems like option1 is better choice. Please let me know your thoughts.
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Since nobody that trades FOTM is helping you out, I will offer my opinion. I would just wait it out a bit. I think we drift higher over the next few days. JMO, but I am right about 50% of the time.:D

Anyway, I just think that hasty decisions to close on a move like this usually represent the most inopportune timing. OTOH, you follow OC's strategy for FOTM and part of it is being able to take a loss.
 
Quote from mantenar:



Seems like option1 is better choice. Please let me know your thoughts.
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mantenar,

i will take a stab at your situation but you are probably not going to like my suggestion.

This is what i would do if i were in your situation. I'd offset the spread today and move on. Adjusting it or hedging it here(whether i agree with hedging or not, too late for that anyway) will introduce more risk which you will not be properly compensated for.

How would i close? On the first nice bounce today. I might wait and do it in the afternoon since too much selling was already done and at this point we might get a bounce later on but understand that also bring in risk.

Again, it's a difficult situation you are in but i personally see no benefit in adjusting here over a simple offset. If you have the balls to wait it out till the end we are probably not going to expire ITM but who knows. The thing with FOTM spreads is that you must think defense first which will make you hedge/adjust at the worst time but you have no other choice.

Just so you know, i dont trade FOTM credit spreads so take my suggestion accordingly. Good luck with your trade. hopefully you have <10% at risk in this trade.
 
Quote from rallymode:

Any of the FOTM guys feeling any pain today that they'd like to share?
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Man, what are you some kind of sadist?


Some of us are taking it up the bunghole...:eek:

Where's my Prep-H...:confused:

Ah, here it is...:cool:

********************************
 
Quote from rallymode:

ryank,

how are those paper trades doing? Could you post the P/L of both positions today?
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It's not very pretty at the moment but the CTM is losing a lot less than the FOTM if you are looking for a silver lining. The FOTM is losing over 3x the initial credit while the CTM is "only" losing .5x the initial credit and we are down to the long strike :eek:


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

May 22nd
1215/1225 puts mid is $1.00 = loss of $500
1240/1245 puts mid is $.80 = gain of $200

May 31st
1215/1225 puts mid is 1.2 = loss of $700
1240/1245 puts mid is .85 = gain of $175

June 8th
1215/1225 puts mid is 2.20 = loss of $1700
1240/1245 puts mid is 2.25 = loss of $525

EDIT: Theoretical price of the 1215/1225 mid if the SPX was at 1215 today (the long strike, similar position to where we are at with the CTM spread) and no change in the VIX = 5.75 or a loss of $5250 :eek: Just an interesting mental exercise.
 
Anybody have an opinion on scalping some extra credits by selling the 1185/1175 june bull put spreads? 7 days to go, and i think the credit could be around .45.

Comments?

I'm already in the 1205/1195's
 
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