SPX Credit Spread Trader

Quote from rallymode:

Alot of discussion lately on use of TA to call direction on the SPX. For those interested, I thought i'd post exactly what i am usually looking at when i place my SPX trades. Is it perfect? Certainly not, but is very manageable. I have personally placed a trade at each and every point i have outlined on that chart except maybe once in april or may. I even drew my next trade LOL

Looking at the chart one can argue why i didnt go long/short the futures instead and make a killing. Well, it just isnt my style. We are all good at our own things.

I consider other things when i open a trade not just TA but it certainly is an important part of my trading. Here it is:

spx1zs.png


Excuse my messy picture, apparently those drawing lessons i took in 3rd grade were a waste of my time, should have been studying stocks instead LOL
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I don't know how to attach the chart from BIG CHARTS but if you guys have a look at it you can see the slow stoc has reached the peak as Rally said and the SPX is at 1280. I guess its time for SPX to go down from around here. I just select the standard slow stocs and have not adjusted any of the parameters. KIS.
 
Quote from Maverick74:

I have written at length on this board about Christmas trees. It should be properly noted that the only reason one should trade ladders is to play the volatility skew.
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I agree, Christmas trees are good for capturing steep skews that are expected to flatten as was observed last week.

My remarks pertaining to the relationship with flies and condors were only in the context of being one adjustment away from those positions if it becomes desireable to lock-in or obtain a "free" or better OTM lottery ticket after favorable activity (this was discussed for ratio spreads a couple pages back) and hence not to be confused at all with the "normal" use of iron condors and the like as per the bulk of this thread. Entirely different objectives.

You're right, I should have been clearer on that point! Worms remain in the can for now?

MoMoney.
 
Quote from Maverick74:

I have written at length on this board about Christmas trees.
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Found this one:

Mav's Christmas Trees

...plenty there for consideration. Thanks.

Essentially: diagonalized Christmas trees. Use of back month increases vega sensitivity over a normal Christmas tree. Good stuff.

It reaffirms my belief that everything on ET has been discussed before at least twice!

MoMoney.
 
Thanks for bringing up that thread Mo. I had read it before but it didn't make much sense. (total newby at the time) I think my call situation now is a kinda backspread/christmas tree thingie...Long 150 Jul 1320's, short 50 1310's short 50 1295's and short 25 1285's:eek: as I said earlier I've been playing the call side very heavily this month to drum up cash so far 17 trades (some single some double mostly short term playing the vol's) This has been under the theory "you can't hit a moving target":p

One other point to make is even a year ago many types of trades just weren't feasible for the retail trader due to high commish. Now with .75 (IB) and .95 TOS (no fee to xl trade) it becomes more feasible.
 
You have to also realize that there are considerations to make when deciding whether to adjust the ratio spread into a FLY.

First look at the spread and see the net loss to close it or if there is any profit.

Second compare the new net debit or credit by converting to a FLY. If the net loss to close is higher, then convert to FLY and let the lottery ticket stay in place.

Third, to finalize any decision, you have to determine whether you think the index will continue moving lower into your profit zone or just keep crashing. If it is gonna keep crashing, converting to a FLY might not be worth it since it would race right past your profit zone. However, if you think the market will continue lower and settle somewhere between the long strikes, then adjusting to a FLY might be better than closing the entire position.

Another consideration to convert is whether you can do so and have the FLY at a nice net credit For example, I had my 1200*1175 put ratio spread on ES for a credit of $12,500. If the cost of adding the FLY would have left me a net credit of $5k or greater, I would have strongly considered taking the $5k now and moving on while leaving my lottery ticket in place for huge potential payout. If the market raced up, like it actually did, I stil pocketed nice premium.

So we never adjust to adjust. You have to take into considerations a few factors to determine what would be the best course of action.


P.S. Huge Soccer Fan! And I was upset at how the Socceroos where ripped off by the ref. As regulation time is expiring you never call a penalty unless it is super blatant and clear. Ref screwed up.

Quote from scoobie27:

Thanks Coach and Rally,

Just generalising, but if I do that I think I may have locked in a loss in this situation if theta has not had too much effect or Vols did not drop too much in the meantime (or heavens forbid Vols go up). But I still leave myself the lottery ticket should ES end between the first long strike and the short strike ( preferably at the short). Oops or even some distance below the short strike. Or I can maybe make the distance between the short strike and the new wing shorter, which brings up a new and i think positive scenario. Many possibilities..
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Fidelity Active Trader application

Quote from scoobie27:

Never heard of that one before. Hasn't been discussed much here but two accounts is enough for me or i'll start losing track of me funds. But might have quick look at the website out of curiosity.
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I have several Fidelity account because my employer has my 401K there as well as stock options, etc. I mostly have my controllable accounts in mutual funds.

I have traded equity options there but it's so damn cumberson to get anything done. You can't leg into a short leg of a spread, sell short, etc., without calling through their switchboard.

I've pulled most of my available cash out and moved them to other brokers who are more customer friendly.
 
Quote from nlslax:

Good point. As big as Fidelity is, it's a wonder why more traders dont use them. I checked with them a few years ago about doing spreads. At the time they used margin on both sides of a condor. I didn't look into them any further.
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Bigger is not better. Fidelity is geared towards equities and mutual funds. Option traders are a secondary consideration.
 
With all due respect I cannot see how anyone who wishes to trade options seriously could use something like Fidelity. If you are not with a broker who knows options or has platforms made for option traders, then you are trading at a disadvantage,
 
Quote from optioncoach:

So we never adjust to adjust. You have to take into considerations a few factors to determine what would be the best course of action.


P.S. Huge Soccer Fan! And I was upset at how the Socceroos where ripped off by the ref. As regulation time is expiring you never call a penalty unless it is super blatant and clear. Ref screwed up.
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Yup, gotcha and i really like the adjustment options. Will play on paper all those scenarios in more details with the real numbers. Really like this Put Ratio Spread risk profile. Think I will concentrate on this and credit spreads for a while before taking on more stuff.

On to soccer! Totally ripped off :mad: I even asked an Italian (not Aussie Italian but real tourist from Italy) and he thought they shouldn't have gotten the penalty. Such is the game of soccer. That player (Grosso) would have tripped over an overgrown weed to get the penalty:mad: Looking forward to France Portugal tonight :D
 
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