SPX Credit Spread Trader

Quote from volatilitypimp:

If anyone, you are the one with the condecending tone on coach's thread. It does seem to me(as it does others on this thread) that you are hoping for an extra whippy market to shake out the newbie's on here trying to learn a proven successful strategy. Then, when the market sells off 80+ points, you come on here with your holier than thou 'told ya so' platitudes.

Give us a freikin' break already.

Coach is right. change in vega is muted on a covered selling strategy, unlike nekkid selling. to portend that fact as a falsehood is 'ridiculous' in and of itself.

Second, what does SPX traded at one exchange have anything to do with the price of beans in Boston?

Third, what does convexity have anything to do with selling otm credit spreads? Unless your talking about pricing variance swaps or gamma curvature, this has no relevance.

Fourth, getting 'raped by the MM's' and all your other hedge/adjust/roll slippage is just flat out wrong as well. As options move otm to atm, they in fact become MORE liquid as at the money options are the most readily traded(remedial options 101). I don't buy into the liquidity holes as other mention about larger orders can get out before smaller hands. An order is an order is an order is liquidity is liquidity. Size matters not when mm's are trying to book their inventory for the day, IMO.

In sum, try to use the gray matter that God/Allah/Mohammed/Budda gave you before you start attacking Coach's ideas as ridiculous and ludicrous.
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Wasnt talking to you so dont see why you felt the need to respond to me so i will say this. All this coming from a guy who's been trading options for less than 12 months? Dont want to sound like an ass (perhaps too late for that lol) But a newb in search of a proven successful strategy in FOTM credit spreads? Please don't make me laugh. :D

Hate to burst your bubble but there is no such thing as a proven successful strategy. There's only strategies that can be proven successful/unsuccessful in the hands of good/bad traders. FOTM credit spread strategy is NOT a newb friendly strategy despite the high probabilities.

See, responding to statements like yours is why it appears that i am picking on coach's strategy when infact it isnt an attack towards him or anyone. It's just an attempt to dissuade the myth of falling in love with a credit spread. Perhaps, it's my fault i am so animate about it. I am working on it :)
 
Quote from rdemyan:



BTW: Is there a way that I can display images contained on my hard drive (not the internet) directly in these posts as opposed to attaching them.
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I dont think you can display them from your drive but i coul dbe wrong. If you want to display them rather than attach them you have to upload them to a host and direct link them using the [i.m.g]yourlink[/i.m.g] code. no dots in the img's.
 
all of you guys are missing imo the big picture regarding risk management.
i am shocked that no one is discussing this.
oc, adjusted. most people here would not have done this. so much was demonstrated when this was done. it shows such things as a business like approach with no emotion. i am impressed with your ability to manage. enough said, i am sure most understand the implications to longevity that this behavior demonstrates. everyone should review that adjustment post , it was written with different emotions and actions than other peoples adjustments.
with that said, i do not trade fotm, but as a twelve year option trader; i am moved.

ps: anyone trade es puts/calls? the margin requirement is (span) much less than spx.
i currently have july 1120's that require 700 margin each.
 
Hey vp, if you don't think they are present , look up LTCM. A majority of their losses were in part bec they coudlnt get out of their huge position. If you don't think they exist, try trading in size in coffee , cocoa and Oj options.
 
I think was my point.... I do not think anyone here has expressed any concern over credit spreads in higher vol environment. I actuallly welcome it because due to the put spread skew I can go further OTM then I would conservatively go. What concerns me more is actual volatility of the markets to the downside and this 100 drop was pretty orderly over the short-time period and followed a technical analysis pattern :D

Quote from Cache Landing:


Funny thing is, everyone here loved the FOTM credit spreads during extremely low vols (IMO a less desirable time to sell FOTM), and now that vols/credits are higher (IMO a much better environment for selling FOTM) people are getting worried. Based on my experience, everyone should be getting excited that vols are increasing. It makes OC's strategy all the more appealing.
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I use tinyurl.com to host the image and they provide the URL link to imbed the image here in the post. That might be the best way to post an image from ones own drive.

Quite useful for putting JA pics in here. Man did anyone see here hosting the MTV Music Awards? First time I actually watched the show on mute lol...

Quote from rallymode:

I dont think you can display them from your drive but i coul dbe wrong. If you want to display them rather than attach them you have to upload them to a host and direct link them using the [i.m.g]yourlink[/i.m.g] code. no dots in the img's.
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I think Rally trades the ES options. Unfortunately only IB allows them so most here are trading SPX.


Quote from domestic:

all of you guys are missing imo the big picture regarding risk management.
i am shocked that no one is discussing this.
oc, adjusted. most people here would not have done this. so much was demonstrated when this was done. it shows such things as a business like approach with no emotion. i am impressed with your ability to manage. enough said, i am sure most understand the implications to longevity that this behavior demonstrates. everyone should review that adjustment post , it was written with different emotions and actions than other peoples adjustments.
with that said, i do not trade fotm, but as a twelve year option trader; i am moved.

ps: anyone trade es puts/calls? the margin requirement is (span) much less than spx.
i currently have july 1120's that require 700 margin each.
More...
 
Quote from domestic:

all of you guys are missing imo the big picture regarding risk management.
i am shocked that no one is discussing this.
oc, adjusted. most people here would not have done this. so much was demonstrated when this was done. it shows such things as a business like approach with no emotion. i am impressed with your ability to manage. enough said, i am sure most understand the implications to longevity that this behavior demonstrates. everyone should review that adjustment post , it was written with different emotions and actions than other peoples adjustments.
with that said, i do not trade fotm, but as a twelve year option trader; i am moved.

ps: anyone trade es puts/calls? the margin requirement is (span) much less than spx.
i currently have july 1120's that require 700 margin each.
More...

really ? While I understand OC's rational of adjustment ( piece of mind , "comfort zone") let's look at it strictly on odds vs. probability bases. He took an actual loss of 17k vs. potential future loss of 112k. IOW , he placed a 5.5:1 bet that SPX WILL move 35 point lower in the next 48 hours. Can its happen this time ? Of course. But if one place the same bet 10 times , you think he/she will have an overall +PnL?
 
Quote from IV_Trader:

really ? While I understand OC's rational of adjustment ( piece of mind , "comfort zone")
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you missed MY entire point. imo, the reason for his adjustment was not "piece of mind, comfort zone" . it is standard risk management rules. i run and own a 50 person business in addition to my option trading. i run the same risk management rules. it is possible that i see it wrong, but i doubt it. only coach knows what is in his head.
 
Hmmm where did I take a $17k loss and where did I bet that SPX WILL move 35 points lower.... Don't forget the call side of my legged into condor and put profits already banked on my JUNE positions.

I did not make any bets I am going to make 10 times. This was a move lower for some cushion with 2 days to expiration.

As of right now if all positions expire worthless I have a loss of about $5k...

Quote from IV_Trader:

really ? While I understand OC's rational of adjustment ( piece of mind , "comfort zone") let's look at it strictly on odds vs. probability bases. He took an actual loss of 17k vs. potential future loss of 112k. IOW , he placed a 5.5:1 bet that SPX WILL move 35 point lower in the next 48 hours. Can its happen this time ? Of course. But if one place the same bet 10 times , you think he/she will have an overall +PnL?
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