SPX Credit Spread Trader

[momoneythansens]

Basically, it defaults to the front week/month but you are not stuck with it. You can vary the IV you want to use by clicking on the spanner icon on the far right at the top of your positions and adjust up/down by an absolute amount.

Whether you believe weekly IV is of use or not is your choice and the platform makes no assumptions on the matter.

Quote from codyhopkins:

Now wouldn't it make more sense to use the closest monthlys for the vol value.

 

[rallymode]

Quote from ryank:

Weren't you the guy talking about "bullish hammers" or some other TA stuff yesterday? Those must be part of the 10% that is good lol.

All i will say is that if those "bullish hammers" always worked, we'd all be filthy rich like cache LOL

 

[Cache Landing]

Quote from rallymode:

All i will say is that if those "bullish hammers" always worked, we'd all be filthy rich like cache LOL

----> he says as cache munches on his extremely low budget instant mac n' cheese with sliced hot dogs.

Seriously though, on the topic of TA. Every signal needs to be taken in light of all the available information. TA should not be without fundamentals. In fact, the two should be working synergistically. No signal is going to be 100% accurate, but that doesn't really matter in the end.

A credit spread is a probability bet based on a (log)normal distribution, the pricing of which doesn't generally take into account whether or not there was a hammer, shooting star, etc. Thus a trader should break even if picking setups at random (ignoring slippage/commisions). Price/volatility forecasting have the ability to provide an edge as the pricing of the options doesn't always reflect an individual's forecasts. So a trader should be able to make money if able to forecast correctly slightly more aften than someone picking at random. Any edge is helpful. Team that with good money/risk management and you might have a profitable trader.

 

[mantenar]

I was playing with Theo price on SPX strikes from 1255 to 1235. How accurate tos calculates. I have a short strike at 1225. We have six days to expiration - including the weekends. My understanding is that theta of weekend will be reflected in the Friday option prices. Is it true. As move to closer to expiration , How do the greeks work. Is there anyway to display THETA graph of options in TOS.

Theta of CTM options increases more than Theta of OTM options.
Delta of OTM option decreases
Vega impact would also decreases.

Do MMs control options prices by keeping bid/ask wide.

Please let me know your thoughts.

What are the chances to get filled at the mid price on SPX spread in the expiration week.

 

[momoneythansens]

Quote from mantenar:

I was playing with Theo price on SPX strikes from 1255 to 1235. How accurate tos calculates.

They use a special magic potion which allows very accurate calculations.

OR perhaps they use the standard Black Scholes/Binomial formulas like everyone else...I forget which.

I have a short strike at 1225. We have six days to expiration - including the weekends. My understanding is that theta of weekend will be reflected in the Friday option prices. Is it true.

Not necessarily. Current discussions are taking place now. Also, search on ET, this has been discussed before with more detail.

How do the greeks work.

Erm, not sure there is a short and simple answer.

Is there anyway to display THETA graph of options in TOS.

Use the cunningly disguised option to plot THETA on the risk profile by choosing THETA from the list of options. The default is P/L OPEN.

Theta of CTM options increases more than Theta of OTM options.

Yes, THETA and GAMMA peak ATM.

Do MMs control options prices by keeping bid/ask wide.

They make their money on the spread.

What are the chances to get filled at the mid price on SPX spread in the expiration week.

Earlier discussion on why spreads widen as expiration closes in.

Good luck!

MoMoney

 

[qamhwr]

Only the part that doesn't work is bogus the rest is good.

George

Quote from rallymode:

i didnt want to paint such an ugly image, but you said it much better i guess

 

[ready]

Hey MO
You Rock Thanks for the great info, although I did'nt even ask.

 

[qamhwr]

If you stated that 100% of fundamental data was bogus I would accept that statement.

George

Quote from Cache Landing:

----> he says as cache munches on his extremely low budget instant mac n' cheese with sliced hot dogs.

Seriously though, on the topic of TA. Every signal needs to be taken in light of all the available information. TA should not be without fundamentals. In fact, the two should be working synergistically. No signal is going to be 100% accurate, but that doesn't really matter in the end.

A credit spread is a probability bet based on a (log)normal distribution, the pricing of which doesn't generally take into account whether or not there was a hammer, shooting star, etc. Thus a trader should break even if picking setups at random (ignoring slippage/commisions). Price/volatility forecasting have the ability to provide an edge as the pricing of the options doesn't always reflect an individual's forecasts. So a trader should be able to make money if able to forecast correctly slightly more aften than someone picking at random. Any edge is helpful. Team that with good money/risk management and you might have a profitable trader.

 

[cdowis]

>I am now sitting with a loss of 5,520 with any expiration close above 669. Any help with this one?

I've seen this same question several times over the past couple of weeks ==> the position went against me and now what do I do?

Well, as Dan Sheridan sez to his students:

"Don't put on a position until you have an exit strategy."

With my vast experience in losing money... uh....paying tuition, the one thing I have learned is that I gotta a PLAN, an exit strategy.

====What does my trading plan tell me to do?====

1. When the market is 10 points away from my short,
2. when one leg grows to the size of the total initial premium
etc. to liquidate my entire position.

Somebody posted about 5-6 possible exit strategies several weeks ago, and perhaps they can repeat their post.

 

[cdowis]

Now what?

Does anyone agree with me that we are sitting around twiddling our collective thumbs.

No bull put spreads == not in a falling market.

And bear call spreads? Am I crazy?

I do FOTM, but 1340 and 1160 is abit wide even for me, and legging in is not a pleasant thought.

Hmmm....

Comments, suggestions, profound insights?