SPX Credit Spread Trader

Cache Landing · Jun 8, 2006

Wow!!! Dare we close in positive territory today? Talk about a bullish indicator.

ryank · Jun 8, 2006

Quote from Cache Landing:

Wow!!! Dare we close in positive territory today? Talk about a bullish indicator.

SSSSHHHHHHHHHH! Don't you know that the market makers secretly read this thread and do exactly the opposite of what everybody wants!

Crucis · Jun 8, 2006

Half hour to go and $2.47 down.

It could happen!

mantenar · Jun 8, 2006

rallymode,

Thanks for your advise. I am also looking at that option. surprising Dow has recovered. Hoping that it is closes positive. I want to wait for one more day.

Quote from rallymode:

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.

rallymode · Jun 8, 2006

Quote from Cache Landing:

Wow!!! Dare we close in positive territory today? Talk about a bullish indicator.

cache, i guess my SPX "insert a low enough number here" before "insert a high enough number here" is a good indicator to follow LOL It's 2:0 track record so far

Mantenar -> still in your spread? It appears you might've dodged a bullet this time around.

andysmith · Jun 8, 2006

A lot of people expected today to be a reversal day and this confirms it... but I always wonder what the market will do when everyone is in the same camp......

Quote from Cache Landing:

Wow!!! Dare we close in positive territory today? Talk about a bullish indicator.

Cache Landing · Jun 8, 2006

Quote from Crucis:

Half hour to go and $2.47 down.

It could happen!

20 minutes and up 2.50

Good call Rally. I figured the 1245 level would hold. Classic case of the lunchtime doldrums overreaction. I had no idea we would bounce this hard though.

rallymode · Jun 8, 2006

Quote from Cache Landing:

20 minutes and up 2.50

I had no idea we would bounce this hard though.

I was contemplating a quick smack and grab job with the 1230/1225 june spread(it was going for >$2.2 mid at the low and vix >20) but was somewhat gun shy given i already had a 1240/1235 position that became ATM. If i had no positions i would've been on it like there's no tomorrow.

I see plenty of resistance going forward though. Pretty much at every 10 round points on the SPX. Interesting days ahead for sure, nice long ass bullish hammer formed today on the daily.(not seen in years)

mantenar · Jun 8, 2006

Rallymode,

I am still in my credit spread. I have been watching SPX every few mins. MM seems to keep bid/ask very wide even for the options that are far way. Maybe because of volatity. Feels safe now as my short spread (1225) is about 30 points away.
I want to get out of the trade tommorrow afternoon if SPX trade below 1245.

Quote from rallymode:

cache, i guess my SPX "insert a low enough number here" before "insert a high enough number here" is a good indicator to follow LOL It's 2:0 track record so far

Mantenar -> still in your spread? It appears you might've dodged a bullet this time around.

rallymode · Jun 8, 2006

Quote from mantenar:

Rallymode,

I am still in my credit spread. I have been watching SPX every few mins. MM seems to keep bid/ask very wide even for the options that are far way. Maybe because of volatity. Feels safe now as my short spread (1225) is about 30 points away.
I want to get out of the trade tommorrow afternoon if SPX trade below 1245.

mantenar,

vix is at 18+ so yeah the OTM puts are well bid up. You will get raped on your way out. Like i said before, you most likely dodged a bullet but keep this in mind next time you open a FOTM spread. Chances are you will be in this situation again and if the volty stays high, it will happen more often than you might anticipate.