SPX Credit Spread Trader

[El OchoCinco]

THe two main reasons are European exercise and the fact that the calls are based off the forward expectation of volatility and both cause the options to trade at a discount to intrinsic value. Especially with so much time to expiration. IN other words compare the AUG 15 Call to the JUN 15 Call where the discount is not as steep.

Quote from smilingsynic:

Phil,

Could you explain why the 15 calls were trading only for 4.3 when the VIX is well over 20 (22.54 as I write)? Is this an indication that the market feels strongly that at August expiration the VIX will be around 19.3 (15 strike plus the 4.3 you sold them for)?

Btw, I have absolutely zero experience with these new VIX options. Perhaps this explains my question. Thanks.

 

[El OchoCinco]

I knew it would be higher..... because I adjusted.

Coach Phil Contrarian Indicator is alive and well

Quote from Crucis:

SPX is at 1229.93---in the green by 6. Who'd thunk it a few hours ago.

 

[MTE]

Quote from dojiboy007:

Has anyone addressed whether or not options on futures are subject to pattern daytrader rule?

Futures don't fall under PDT so options on futures shouldn't either. I don't know for sure though, but it seems pretty logical.

 

[Crucis]

Quote from optioncoach:

I knew it would be higher..... because I adjusted.

Coach Phil Contrarian Indicator is alive and well

Yeah and I closed by 1200/1210 spread yesterday at a 1.05 loss. Shoulda had more patience.

 

[rsflint]

Whew on the late day SPX rally (currently 1229) just closed out my 1195/1205 Bullish Put Spreads for $0.50 cents. My 1320/1330 call spreads will expire worthless.

Iron Condor:
1195/1205 Put Spread = $0.80
1320/1330 Call Spread = $0.50

$1.30 = Total Credit
Less $0.50
$0.80 = profit per contract (not counting commissions)

Lets hope next month is a less stressful month!

 

[El OchoCinco]

GOOD JOB!

 

[El OchoCinco]

The next time you think you should have more patience is the time when the market will move right through your short strike and cause a major loss. Do not second guess your trading plan and do not look for ways to get around it.

I made an adjustment that today looks quite unnecessary but I have no regrets because I followed my risk management plan based on the market conditions and I did not hesitate. I am quite happy with my decision and I cannot control the market. I do not mind taking a small loss and sometimes it is good to do so since I had about 6 or 7 winning months in a row and it is good to not tempt the trading gods .

My June positions were successful because I followed my plan. Regardless if I ended up with a small loss.

Quote from Crucis:

Yeah and I closed by 1200/1210 spread yesterday at a 1.05 loss. Shoulda had more patience.

 

[smilingsynic]

Quote from MTE:

VIX options are priced off futures/variance swap not the spot VIX so the location of the spot VIX has little to do with Aug options.

Got it.

Am I right in assuming that someone who wants to trade vol should probably avoid the VIX options/futures, and that these products are more for hedging than speculating?

 

[MTE]

Quote from smilingsynic:

Got it.

Am I right in assuming that someone who wants to trade vol should probably avoid the VIX options/futures, and that these products are more for hedging than speculating?

It's not as clear cut as that, but if one wants to trade volatility then he/she should be aware of the various pitfalls, i.e. pricing specifics.

 

[andysmith]

SPX closed above 1230 today.

Are we going to re-test lows tomorrow or will it follow through to the upside? (my 2 cents is follow through to the upside).