Quote from momoneythansens:
MO,
yes, I am kind of confused. When SPX reaches 1235, I want to make the decision. I am thinking market is oversold, If close the spread tomorrow, I can gain some more time decay.
If you were in my position, what decision do you make.
Why do you want to do anything?
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
:eek:
Well, bit of a sell-off after my post LOL. Perhaps I can become as reliable a fade as Phil's partial hedges? Hmm....
What would I do in your position? I would stick to the plan, whatever it was. I don't know how large the position is relative to portfolio and what other positions you have on in your portfolio that might be balancing out this position. From that perspective anything I might say could be misleading.
I personally would be tempted to eat the loss and close the position or let it play out from a probability point of view - it all depends on the size and those other factors!
Triple witching + news + SET means anything can happen
One day's decay is not going to cover losses accumulated today from 16 point drop and increase in IV so from that point of view, it would have been better to close earlier today when you obviously had your "spider sense" telling you that your spread might be under threat.
Then again, your instinct is that we are now oversold, so perhaps a little bump will help you get out for a smaller loss.
All of which adds up to absolutely no help for you...
Good luck!
MoMoney.
Well, bit of a sell-off after my post LOL. Perhaps I can become as reliable a fade as Phil's partial hedges? Hmm....
What would I do in your position? I would stick to the plan, whatever it was. I don't know how large the position is relative to portfolio and what other positions you have on in your portfolio that might be balancing out this position. From that perspective anything I might say could be misleading.
I personally would be tempted to eat the loss and close the position or let it play out from a probability point of view - it all depends on the size and those other factors!
Triple witching + news + SET means anything can happen
One day's decay is not going to cover losses accumulated today from 16 point drop and increase in IV so from that point of view, it would have been better to close earlier today when you obviously had your "spider sense" telling you that your spread might be under threat.
Then again, your instinct is that we are now oversold, so perhaps a little bump will help you get out for a smaller loss.
All of which adds up to absolutely no help for you...
Good luck!
MoMoney.
Coach,
Are you shacking up with Everlast(entering a house of pain)? Looks like you could be in Barney(barney rubble, trouble)(a la ocean's 11). Any planned adjustments if we get another day of selling?
Are you shacking up with Everlast(entering a house of pain)? Looks like you could be in Barney(barney rubble, trouble)(a la ocean's 11). Any planned adjustments if we get another day of selling?
I have the 1195 short strike for now and will hold for the next few days. I might consider adjustment if we get to 1220 or below depending on the timing. More interested in seeing what numbers come out in the next day or so and the market reaction to if....
Coach and other experts, as SPX closed @1236; Iâm running into trouble for my June SPX spreads. I need your advice. I have the following positions for June with SPX:
Sold 20 June 1370/1385 calls @1.00
Sold 10 June 1370/1395 calls @1.50
Sold 20 June 1240/1225 puts @0.75
Total credit before commission is $5,000
Last Friday when SPX was @1255
Bought 10 June 1255/1245 puts @3.50. I learned this partial hedge strategy from Coach.
If SPX opens (SET) @1225 or lower this Friday, Iâll have huge loss. I have to close my position before it hits my short strike. The market is oversold. Any good news will spike up the market, but any bad news can send SPX further lower.
As my account still has buying power, I have not closed my two bear call spreads.
Any help and suggestions would be greatly appreciated.
Sold 20 June 1370/1385 calls @1.00
Sold 10 June 1370/1395 calls @1.50
Sold 20 June 1240/1225 puts @0.75
Total credit before commission is $5,000
Last Friday when SPX was @1255
Bought 10 June 1255/1245 puts @3.50. I learned this partial hedge strategy from Coach.
If SPX opens (SET) @1225 or lower this Friday, Iâll have huge loss. I have to close my position before it hits my short strike. The market is oversold. Any good news will spike up the market, but any bad news can send SPX further lower.
As my account still has buying power, I have not closed my two bear call spreads.
Any help and suggestions would be greatly appreciated.
What some people do that like to keep the spreads open is hedge with the same number of contracts in the opposite direction (insurance) and then close the insurance if the trade moves back in line. If you buy "insurance" properly the rate of return will exceed the rate of loss on the spread....which would mean opening 20 puts on your 1240/1225 bull put spread.
Not sure how that will work with your partial hedge though, I would have to take time to look at everything together.
First, you let your short strike move ITM which is a real no-no here. Second, the short strike was a little close to major support and I would rather be a few strikes minimum outside support. Third, you are talking as though you would hold to SET regardless of the SPX movement and if it hit 1225 you would take the huge loss. All of these comments imply you are being too passive with this strategy.
Your $30,000 max loss would be reduced by the $5,000 in credits as well as potentially by the $6,500 in profit on the hedge if it goes to max profit. However, why would you allow your spread to get to a max of $30k. That is not active risk management, that is passive risk management. If we get a bounce tomorrow, you may be able to undo the credit spread and take profit in the hedge and minimize your damage here. if we get any strong move lower you will take a bigger loss to get out but at least not the max loss.
I wish I had an easy answer but the water is already in your house and you are asking how to keep it dry. Possibilities include moving the strikes lower and increasing the contracts to buy you another day or two of time to reach expiration. If the spreads are not that expensive you could close out the put spreads and the hedge and take a limited loss. If we move lower, you can look at rolling into a butterfly but this could cost a lot more and cause more losses so I would hold off on this for right now. You need to look at the bid/ask prices before the market open on Tuesday and formulate your adjustment strategies. Never let a short strike go ITM no matter what.
Let's see what happens in the morning..
Your $30,000 max loss would be reduced by the $5,000 in credits as well as potentially by the $6,500 in profit on the hedge if it goes to max profit. However, why would you allow your spread to get to a max of $30k. That is not active risk management, that is passive risk management. If we get a bounce tomorrow, you may be able to undo the credit spread and take profit in the hedge and minimize your damage here. if we get any strong move lower you will take a bigger loss to get out but at least not the max loss.
I wish I had an easy answer but the water is already in your house and you are asking how to keep it dry. Possibilities include moving the strikes lower and increasing the contracts to buy you another day or two of time to reach expiration. If the spreads are not that expensive you could close out the put spreads and the hedge and take a limited loss. If we move lower, you can look at rolling into a butterfly but this could cost a lot more and cause more losses so I would hold off on this for right now. You need to look at the bid/ask prices before the market open on Tuesday and formulate your adjustment strategies. Never let a short strike go ITM no matter what.
Let's see what happens in the morning..
Optioncoach,
I have credit spread - 20 SPX 1225/1210 . It seems there is strong resistance at 1235. But , the futures are off by 5 points. SPX will open below 1235. I think I have the following options
1 - Close the spread and take a loss of 4.00 per spread
I tried to close the spread and it did not get filled on Monday. The mid price of spread had moved from 1.65 to 3.75. I readjusted many times. But no luck. I should have been more aggressive by offering the price (mid price + 20)
2. Convert into B-fly by buying debit 1245/1225 spread by for 6.00. It seems to be expensive. Sell 1185/1175 credit spread (0.40) to finance B-fly at some risk
3. Wait one more day to gain more than theta - more risk and it may not be good option as THETA decay and VOL increase will not offset the losses. I tested in TOS, if it wait till thu,the spread prices may not drop because of the volatilty.( assuming SPX is at 1225)
4. Just want to how to do box for this - Do I have to buy a call spread - sell 1210 call (42.00) and buy 1225 call (18.00 ) . It seems very expensive.
5. Roll it down- 1185/1175 - Is it good option in the last week of expiration.
I have no other Hedges in place. Please advise based on the market sentiment and SPX support/resistance.
I have credit spread - 20 SPX 1225/1210 . It seems there is strong resistance at 1235. But , the futures are off by 5 points. SPX will open below 1235. I think I have the following options
1 - Close the spread and take a loss of 4.00 per spread
I tried to close the spread and it did not get filled on Monday. The mid price of spread had moved from 1.65 to 3.75. I readjusted many times. But no luck. I should have been more aggressive by offering the price (mid price + 20)
2. Convert into B-fly by buying debit 1245/1225 spread by for 6.00. It seems to be expensive. Sell 1185/1175 credit spread (0.40) to finance B-fly at some risk
3. Wait one more day to gain more than theta - more risk and it may not be good option as THETA decay and VOL increase will not offset the losses. I tested in TOS, if it wait till thu,the spread prices may not drop because of the volatilty.( assuming SPX is at 1225)
4. Just want to how to do box for this - Do I have to buy a call spread - sell 1210 call (42.00) and buy 1225 call (18.00 ) . It seems very expensive.
5. Roll it down- 1185/1175 - Is it good option in the last week of expiration.
I have no other Hedges in place. Please advise based on the market sentiment and SPX support/resistance.
No, Pregnant fly - iron/siamese/natural or otherwise.
Example dissection showing embedded baby flies.
Example dissection showing embedded baby flies.
Quote from subq:
otherwise known as iron butterflies or siamese condors