SPX Credit Spread Trader

[andysmith]

After today's wild move, I understand why this crazy vol may be better for debit spreads....

Quote from skanan:

On 06/13 I closed out all my losing positions when SPX was around 1228.

BTC SPX 1250/1235 $9.8 , loss $890
BTC SPX 1250/1235 $9.4 loss $940-$90=$850
BTC SPX 1235/1245 $6.4 loss $540x2 = $1080
BTC SPX 1235/1245 $6.2 loss $620-$100 = $520

Total loss $3340.

These wipes out about 2-3 months of profit. My loss will reduce after expiration due to the profit on short call about $1000.

My trading plan was probability bet and the loss would fit within my risk limitation. However, somehow, I decide to reduce the lost by closing them earlier when there was a lot of value left in the long side. Now SPX is back around 1248. Had I stayed with my trade plan, I would not loss this much.

So, it looks like I paid dearly for not following the trade plan :-(

I'm not blaming anyone but myself. I'll take off for a while until I feel better.

-Nick

 

[andysmith]

I have often found this to be very difficult to do... if you have any advice, that'd be great.

Quote from rallymode:

If you learn to put risk before profits all the time even when you arent threatened, you will be a much more consistent trader who will survive longer than their counterpart.

 

[Maverick74]

Quote from Sailing:

FYI,

An investment club representative and myself went to Chicago and visited with Maverick and the Vtrader Group.

It was a pleasure to meet Maverick and discuss the arena of options. He was openly honest and sincere in speaking with us over a two hour period while the market was making new lows.

We have an entirely different perspective of professional trading with Mav's insights. The addition of 'haircul margin' and cross-margined risk profiles have given trading option a completely new light.

May I suggest if anyone is in the Chicago area, to give Maverick a call and visit his office.

Thanks Mav for the opportunity to visit and the time you took away from your day to enlighten us. We'll be in touch,

Murray
Grand Rapids Investment Club

Murray,

Thanks for the kind words. It was great to meet you as well. Don't go around saying too many nice things about me though. I don't want to ruin my reputation as a hardass on ET. It took me years to earn my rep. LOL.

As I've told many on ET, my door is always open. Although I understand most on ET like to live in the shadows. I look forward to your next trip back to Chicago. Anyway I can be of help, let me know.

Mav

 

[rallymode]

Quote from andysmith:

I have often found this to be very difficult to do... if you have any advice, that'd be great.

Wish there was an easy answer you can read in a book. It's very difficult, especially if you havent been through alot of difficult situations and taken hard hits. As someone said before, its only after you've taken big hits that you start putting more weight on risk.

I guess if i have to give a suggestion it would be to think about the risk only, and then only consider the profits in the sense that they should compensate you enough for the risk. Then only take those trades where if you woke up tomorrow and you were at your max loss you wouldnt flinch. That should pretty much extend your survival. (That's at the heart of why i dislike high risk positions like the FOTM CS and hardly ever stay naked on the put side for longer than a few days). You dont need to take big risks to make good money in the market but you do need money to be able to take any risks.

Not much help i know, but that's all i can think of right now.

 

[El OchoCinco]

Because being nice to me and very helpful and friendly outside of ET was his way of sucking up LOL...

Besides I get a bigger kick out of proving people wrong. Most people are so cynical they find it hard to believe someone wants to help others out of pure generosity.

Quote from andysmith:

Coach, why did you go with Maverick's firm after he accused you of all that stuff on this board without having a clue about the real you? Do you trust someone who mouths off like that without knowing what he's talking about?

 

[Sailing]

Why would you liquodate at 1290 when your max profit is at 1310? Plus.. your break even is around 1320.... Diagonals are adjustable.... it's not to be played as a delta trade... rather a Vega play. This is why I prefer to use Put Diagonals.. and Call credit spreads.

Volatility increases to the down side.. and decreases on the upside.

Hope this helps,

M~

Quote from cdowis:

Got filled on the call side of my diagonal around 1350 (SP futures):

B Aug 1330
S Jul 1310 @ 60 debit

Will avoid the mistake I made on the last trade (thanks for your advice). If market goes to 1290, will probably look to liquidation rather than going scared into the put leg.

 

[rbsanders]

What I think could work best, is to open your Bull Put (below Support) or Bear Call (above resistance); then you can buy the SPY PUT or CALL at 30 points from your short Strike. This has given me the best protection so far



Would be interested to know when you put on the hedge 30 points out is it at current level for strike or closer to short strike of the spread.


Question for Piccon

 

[piccon]

I put the hedge before the index is close to 30 points of my short strike.

For example SPX @ 1250 and you have SPX BULL PUT 1220/1210, you may buy SPY 124 for protection.

If you buy enough insurance, by the time SPX touches 1220 your SPY124 will provide you with enough money to help pay for any potential loss in the spread or you may make money on both

I hope this helps.

Risk Mangement (Hedging) is the most important concept I learn from Coach Phil

Quote from rbsanders:

What I think could work best, is to open your Bull Put (below Support) or Bear Call (above resistance); then you can buy the SPY PUT or CALL at 30 points from your short Strike. This has given me the best protection so far



Would be interested to know when you put on the hedge 30 points out is it at current level for strike or closer to short strike of the spread.


Question for Piccon

 

[domestic]

rally, regarding es options. clearly the margin is significantly less than spx naked, but can you clearly explain how a spread is different than standard spx? to me, an 1150/1140 credit put is the same (except that it represents half the value), but in real percentage terms how can it be any different than spx? tia

 

[cdowis]

Quote from Sailing:

Why would you liquodate at 1290 when your max profit is at 1310?
M~

Thanks very much. Obviously I am thinking credit spread. The market is moving where I want it to go...

If the market continues to move up fast, do I wait to adjust at 1310, 1320, or......?

It's a very strange feeling for me to want the market to move towards my short option. AND to want volitility to move UP rather than down.

Very odd. Almost like a long option position except with a short in front of it.

Gasp....... I have no idea what I am doing.