Nice swing there 
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
If anyone who trades ES spreads is interested in put ratio spreads for AUG, I have been eyeing the ES AUG 1200/1175 100*200 spread for a credit of 3.25 or $16,250.
With a breakeven point of 1146.25, those are lows not seen since 2004. Once my current ES spreads expire I may grab these if the premium is still there
With a breakeven point of 1146.25, those are lows not seen since 2004. Once my current ES spreads expire I may grab these if the premium is still there
Quote from optioncoach:
If anyone who trades ES spreads is interested in put ratio spreads for AUG, I have been eyeing the ES AUG 1200/1175 100*200 spread for a credit of 3.25 or $16,250.
With a breakeven point of 1146.25, those are lows not seen since 2004. Once my current ES spreads expire I may grab these if the premium is still there
BTW - did VIX options hedge work well ? Sorry if I missed that discussion, I was away for some time.
I did not have a VIX hedge on for this dip in price but it did work the last time VIX ran up to 24 or so. I mean worked in that the options I paid $1.75 for went up to $4.30 or so but I did not buy a lot of them so it was just a nice profit. It would work better if I loaded up when they were cheap and let them run a few months to catch any large spikes.
This trade still has a margin requirement for the 100 naked 1175 puts. If you are going to enter such a trade for a credit of 3.25, why not just do the naked sell? You can sell 100 Aug 1125 puts for 3.25. Same credit. Same margin. Lower breakeven. Same dowside angle on the P/L graph. Same "black swan" risk in that you're short 100 contracts either way.
If the ratio includes a calendar element, the picture certainly changes. However, I don't see the benefit of a straight vertical ratio versus a lower strike naked sale.
But then I have often not seen things right in front of me. Like when my wife wants the can of tomato soup from the back of the pantry. She knows I won't be able to find it...she should just go get it herself.
If the ratio includes a calendar element, the picture certainly changes. However, I don't see the benefit of a straight vertical ratio versus a lower strike naked sale.
But then I have often not seen things right in front of me. Like when my wife wants the can of tomato soup from the back of the pantry. She knows I won't be able to find it...she should just go get it herself.
Quote from optioncoach:
If anyone who trades ES spreads is interested in put ratio spreads for AUG, I have been eyeing the ES AUG 1200/1175 100*200 spread for a credit of 3.25 or $16,250.
With a breakeven point of 1146.25, those are lows not seen since 2004. Once my current ES spreads expire I may grab these if the premium is still there
The main reason for doing so is the potential for significant profits should the underlying move between the long and short strikes. Also the increases in the short options from delta or IV inreases is tempered slightly from the existence of the closer to the money long puts.
I also could follow up with some adjustments such as converting to a butterfly for a net credit or buying back half the shorts to convert to bear put spread.
It is not a "which is better" comparison, more that put ratio spreads have some other characteristics I like
I also could follow up with some adjustments such as converting to a butterfly for a net credit or buying back half the shorts to convert to bear put spread.
It is not a "which is better" comparison, more that put ratio spreads have some other characteristics I like
Quote from jeffm:
This trade still has a margin requirement for the 100 naked 1175 puts. If you are going to enter such a trade for a credit of 3.25, why not just do the naked sell? You can sell 100 Aug 1125 puts for 3.25. Same credit. Same margin. Lower breakeven. Same dowside angle on the P/L graph. Same "black swan" risk in that you're short 100 contracts either way.
If the ratio includes a calendar element, the picture certainly changes. However, I don't see the benefit of a straight vertical ratio versus a lower strike naked sale.
But then I have often not seen things right in front of me. Like when my wife wants the can of tomato soup from the back of the pantry. She knows I won't be able to find it...she should just go get it herself.
Here is a copy of a previous post of mine from last week:
"Got filled on the following:
STO 300 AUG SPX 1125/1115 Put Spreads @ $0.50
Credit = $15,000
Risk = $285,000
Return = 5.3%
I see support areas at 1220, 1200, 1168 and again at 1135. 1125 was last seen in OCT 2004. Given the levels of support and over 100 points OTM after we have already dropped some 40 points the last 3 days."
"Got filled on the following:
STO 300 AUG SPX 1125/1115 Put Spreads @ $0.50
Credit = $15,000
Risk = $285,000
Return = 5.3%
I see support areas at 1220, 1200, 1168 and again at 1135. 1125 was last seen in OCT 2004. Given the levels of support and over 100 points OTM after we have already dropped some 40 points the last 3 days."
Quote from jeffm:
This trade still has a margin requirement for the 100 naked 1175 puts. If you are going to enter such a trade for a credit of 3.25, why not just do the naked sell? You can sell 100 Aug 1125 puts for 3.25. Same credit. Same margin. Lower breakeven. Same dowside angle on the P/L graph. Same "black swan" risk in that you're short 100 contracts either way.
If the ratio includes a calendar element, the picture certainly changes. However, I don't see the benefit of a straight vertical ratio versus a lower strike naked sale.
But then I have often not seen things right in front of me. Like when my wife wants the can of tomato soup from the back of the pantry. She knows I won't be able to find it...she should just go get it herself.
What is the margin requirement for Aug 1125? My broker didn't allow me to trade even 1 contract with 30000 Option Buying Power. My calculation showed the margin should be less than 20000.