very interesting day indeed. talk about a finish against all odds in light of the bad CPI report. Now that we got this weeks data out of the way(dont think tomorrows employment numbers will be much of an issue) we should start moving back up towards the 1255-1260 area where i see the first major resistance. I think the vols will subside between now and the FED meeting.
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
very interesting day indeed. talk about a finish against all odds in light of the bad CPI report. Now that we got this weeks data out of the way(dont think tomorrows employment numbers will be much of an issue) we should start moving back up towards the 1255-1260 area where i see the first major resistance. I think the vols will subside between now and the FED meeting.
Taken from IB's website:
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Frequently Asked Questions
1. What is a day trader?
The NASD and NYSE define a Pattern Day Trader (PDT) as one who effects 4 or more day trades (same day opening and closing of a given equity security ("stock") or equity option) within a 5 business day period.
Please note that Futures contracts, Futures Options and Single Stock Futures are not included in the SEC Day Trade rule.
2. What is the definition of a "Potential Pattern Day Trader"?
A potential pattern day trader error message means that an account has less than the SEC required $25,000 minimum equity with loan value AND the number of available day trades (3) has already been used within the last 5 days.
The IB system is programmed to prohibit any further trades to be initiated in the account, regardless of the intent to day trade that position or not. The IB system is programmed to protect the accounts with less than $25,000 so the account would not âpotentiallyâ be flagged as a day trading account.
Please note that if an account receives the error message âpotential pattern day traderâ, there is no PDT flag to remove. The account holder will need to wait for the 5-day period to end before any new positions can be initiated in the account.
Coach,
Long time I haven't posted anything here but I wanted to share some experience with my good friends on this board. I learned so much from you guys. Thanks so much. I don't post (mostly) but I read every single post.
It has been a long wild ride and it's not over. I am not completely out of the wood but things look clearer than 2 days ago.
As Rallymode said yesterday, people could be wiped out if you don't have the right risk management skills and trading technique. I can tell you that I could be wiped out. But I didn't want to do any bull put unless I protect myself.
I had condor everywhere but I also use a strategy that saved my (#&.
I had:
RUT 700/690/760/770
RUT 670/660/740/750
SPX 1310/1320/1250/1240
SPX 1310/1320/1215/1205
When the market went up (topping)
Here is what saved me: The strategy is to take advantage of volatility and the market direction to open debit spread for your protection. Buy PUT and then wait to sell the lower strike PUT for about the same price you bought the higher strike which make the debit spread cost you 0.00
I opened:
1) Bought 20 IWM (RUT i-shares) 72 PUT @0.75
Sold 20 IWM 69 @0.75 =>
Debit spread cost 0.00 for max profit of 6K
2) Bought 20 SPY 126 @1.50
Sold 20 SPY 124 @1.60
=> 0.10 credit Max profit 4K
3) Bought here and there a total of70 IWM 71PUT@ 1.96
Sold 70 IWM 70PUT @1.88. I panic I could get more for it
Debit Spread cost: 0.08 Max profit 7K
4) Bought 20 SPY 125 PUT @1.50
This afternoon Sold 20 SPY124 PUT@1.35
Debit Spread cost: 0.15 Max profit 2K
I also sold all my calls spreads last Friday when the Big Thursday Hammer failed.
I closed 27 SPX 1310/1320@0.10 debit
I closed 15 RUT 760/770 @ 0.10 debit
And the opened closer to the money call spread
I open 27 SPX 1275/1285
I opened 15 RUT 1220/1230
So I got 5K for the new Call spreads.
So my hedges value became:
4.2K + 6K +2K + 4K + 7K=24.2K (possible) could get 22K from it
I took big loss on SPX 1250/1240 (6.5K)
Loss on RUT 700/690 (7K)
Loss on RUT 690/680 (2K)
Total loss of 15.5K. I could have avoided the big loss but I was still greedy.
I haven't counted but all my calls spreads will give money.
I am still nursing SPX 1215/1205 and RUT 670/660
I am closing them tomorrow anyway
Possible profit of 6 to 7K (or more). I am not going to complain
Conclusion: I will have some profit this month because I started early with my protection strategy.
I wanted to explain to you how I was able to salvage my skin this month. This market is dangerous; So people need to be careful and make sure you use at least 25 to 30% of your credit to protect your Short strikes.
Sorry for being too long.
Look for picconjune to come back to find this post
Long time I haven't posted anything here but I wanted to share some experience with my good friends on this board. I learned so much from you guys. Thanks so much. I don't post (mostly) but I read every single post.
It has been a long wild ride and it's not over. I am not completely out of the wood but things look clearer than 2 days ago.
As Rallymode said yesterday, people could be wiped out if you don't have the right risk management skills and trading technique. I can tell you that I could be wiped out. But I didn't want to do any bull put unless I protect myself.
I had condor everywhere but I also use a strategy that saved my (#&.
I had:
RUT 700/690/760/770
RUT 670/660/740/750
SPX 1310/1320/1250/1240
SPX 1310/1320/1215/1205
When the market went up (topping)
Here is what saved me: The strategy is to take advantage of volatility and the market direction to open debit spread for your protection. Buy PUT and then wait to sell the lower strike PUT for about the same price you bought the higher strike which make the debit spread cost you 0.00
I opened:
1) Bought 20 IWM (RUT i-shares) 72 PUT @0.75
Sold 20 IWM 69 @0.75 =>
Debit spread cost 0.00 for max profit of 6K
2) Bought 20 SPY 126 @1.50
Sold 20 SPY 124 @1.60
=> 0.10 credit Max profit 4K
3) Bought here and there a total of70 IWM 71PUT@ 1.96
Sold 70 IWM 70PUT @1.88. I panic I could get more for it
Debit Spread cost: 0.08 Max profit 7K
4) Bought 20 SPY 125 PUT @1.50
This afternoon Sold 20 SPY124 PUT@1.35
Debit Spread cost: 0.15 Max profit 2K
I also sold all my calls spreads last Friday when the Big Thursday Hammer failed.
I closed 27 SPX 1310/1320@0.10 debit
I closed 15 RUT 760/770 @ 0.10 debit
And the opened closer to the money call spread
I open 27 SPX 1275/1285
I opened 15 RUT 1220/1230
So I got 5K for the new Call spreads.
So my hedges value became:
4.2K + 6K +2K + 4K + 7K=24.2K (possible) could get 22K from it
I took big loss on SPX 1250/1240 (6.5K)
Loss on RUT 700/690 (7K)
Loss on RUT 690/680 (2K)
Total loss of 15.5K. I could have avoided the big loss but I was still greedy.
I haven't counted but all my calls spreads will give money.
I am still nursing SPX 1215/1205 and RUT 670/660
I am closing them tomorrow anyway
Possible profit of 6 to 7K (or more). I am not going to complain
Conclusion: I will have some profit this month because I started early with my protection strategy.
I wanted to explain to you how I was able to salvage my skin this month. This market is dangerous; So people need to be careful and make sure you use at least 25 to 30% of your credit to protect your Short strikes.
Sorry for being too long.
Look for picconjune to come back to find this post
You can use the VIX options to make directional bets on volatility but as my post showed, the options will trade at a discount so you will not be able to scalp vols. However, in my situation with vols at 16 or so I expected an increase in vols and bought AUG 15 Calls and they went from 1.75 to 4.30 with VIX moving from 16 to 22.50 or so.
As you can see you will get a move in the calls but it will not be anywhere near 1:1 as a normal ITM option. However still profit potential. If you follow them for a month or so and how they move with changes in VIX you will get a better feel for opportunities.
As you can see you will get a move in the calls but it will not be anywhere near 1:1 as a normal ITM option. However still profit potential. If you follow them for a month or so and how they move with changes in VIX you will get a better feel for opportunities.