SPX Credit Spread Trader

[El OchoCinco]

WINNNNNNNERRRRRR! GREAT JOB!

Quote from dojiboy007:

Coach bought put hedge!:eek:

 

[scoobie27]

Quote from RichardRimes:

nope..remember ES is 1/2 the value of spx so double your .55 and your actually getting a better spread

I think thats incorrect? ES may be half the value but im also using halve the margin. Every point is multiplied by 50 instead of 100. err im confused, i think you may be right. Have to think about this one a while

 

[rallymode]

Quote from RichardRimes:

nope..remember ES is 1/2 the value of spx so double your .55 and your actually getting a better spread

actually no, you dont double it to get a better credit?

You only double the number of contracts to get to a comparable value of the total credit received and not the credit per spread. In the example posted it appears the SPX is better but 1. the mid point in the SPX spread might be misquoted and 2. It's the 1310/1320 ES spread you should compare to. The ES premium will not be 10 points at July expiration(if thats the one you are talking about) more like around 6-7, of course this assumes you hold till expiration.

 

[scoobie27]

I think theres a post a few pages back...ill have a look at that

 

[scoobie27]

Quote from rallymode:

actually no, you dont double it to get a better credit?

1. the mid point in the SPX spread might be misquoted and 2. It's the 1310/1320 ES spread you should compare to. The ES premium will not be 10 points at July expiration(if thats the one you are talking about) more like around 6-7, of course this assumes you hold till expiration.

Thanks I think I get it. OK I used the 1315/1325 because the gap between SPX and ES is around close to 10. So you're saying i should use 1310/1320 because the gap will decrease. Why will it decrease to only 6-7 and not 0 by expiration. Well if that's the case ES spreads look way better now. So isn't that an argumnet for trading ES and not SPX?

Rally, Are the fills similar to my SPX experienc. ie. i just shave a nickle or dime off the mid and wait till i get filled. Or do i have buy at ASK and sell at BID?

Thanks

 

[rallymode]

Quote from scoobie27:

Thanks I think I get it. OK I used the 1315/1325 because the gap between SPX and ES is around close to 10. So you're saying i should use 1310/1320 because the gap will decrease. Why will it decrease to only 6-7 and not 0 by expiration. Well if that's the case ES spreads look way better now. So isn't that an argumnet for trading ES and not SPX?

Rally, Are the fills similar to my SPX experienc. ie. i just shave a nickle or dime off the mid and wait till i get filled. Or do i have buy at ASK and sell at BID?

Thanks

Didnt you read the cme link mo gave you a few days ago? LOL

It contained all this and more. With the ES options, once you place an inside bid or offer you become the market so you gotta wait for a fill. I personally leg in by hitting bid/asks +/- a dime or a nickel

 

[scoobie27]

Quote from rallymode:

Didnt you read the cme link mo gave you a few days ago? LOL

It contained all this and more. With the ES options, once you place an inside bid or offer you become the market so you gotta wait for a fill. I personally leg in by hitting bid/asks +/- a dime or a nickel

Nope. Have to read that asap

 

[Prevail]

think about it this way, at this time the spread loses about .1 a day to be reduced to 0.0 by the quarterly 3rd fri.

Quote from scoobie27:

Thanks I think I get it. OK I used the 1315/1325 because the gap between SPX and ES is around close to 10. So you're saying i should use 1310/1320 because the gap will decrease. Why will it decrease to only 6-7 and not 0 by expiration. Well if that's the case ES spreads look way better now. So isn't that an argumnet for trading ES and not SPX?

Rally, Are the fills similar to my SPX experienc. ie. i just shave a nickle or dime off the mid and wait till i get filled. Or do i have buy at ASK and sell at BID?

Thanks

 

[scoobie27]

Quote from Prevail:

think about it this way, at this time the spread loses about .1 a day to be reduced to 0.0 by the quarterly 3rd fri.

Cool, i think i get the picture. Thanks Prevail

 

[rdemyan]

I saw this example trade and am wondering what it is called and if anybody has made similar trades or has some comments on this type of trade.

XEO at 585

Sell 1 XEO August 565 calls @ $24.25
Sell 1 XEO August 605 puts @ $20.25
Profit potential: Max of $450 if the XEO is between 565 and 605. This max profit is presumably just the difference between the two premiums $44.50 and the difference in the spread of $40.

Note that Deep In-The-Money options are being sold here.

Of course any number of contracts can be sold. Margin is a problem but can be managed by buying OTM long positions (example the 625 call and the 545 put). This would be a 60 point spread. The approximate cost of the longs would reduce the profit potential from $450 to about $300. ROI would be about 5%.

Comments, anyone?