SPX Credit Spread Trader

Quote from LeonPhelps:

yo,yip!

easy on the Big Russ

45-50 pt move in less than 1 mo, no problem for R2K, even on upside

will feel like you TKOd in K1 by Bobb Sapp

http://www.youtube.com/watch?v=RaKjk43BJxc&search=bob sapp
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Haha. What can I say? I made a mistake in my model, and I calculated the expected return using put option.

but look at this thread

http://www.elitetrader.com/vb/showthread.php?s=&threadid=63020.

You can make $ with CTM credit spread.

I believe credit spread is a directional play. I have a bearish view of the market, and so lets see how it goes. Risk management and proper adjustment are the keys to successful trading.

BTW I agree that if I didn't make a mistake in my calculation, I would never open this position.
 
Question for the group -- I've got an Iron Condor with 1265 and 1300 short strikes...obviously the 1300 short strike is starting to make me nervous with some technical indicators showing bullish, however the market stopped at the 20-day ma and there are the following resistance points.

resist. 1293.67 8
resist. 1286.41 8
resist. 1281.33 4
resist. 1273.06 6
http://tinyurl.com/zz8nz

What is everyone's thoughts after the Fed meeting?? If Bernake buries his head in the sand to inflation and says no rate crank on 8/8, isn't the SPX going to snap-up quickly? Futures show +1.25 right now on OX login page.

Oh and enjoy one of my fav JA pics :D
http://tinyurl.com/kj9ar

Rookie Rich
 
Quote from rsflint:

Question for the group -- I've got an Iron Condor with 1265 and 1300 short strikes...obviously the 1300 short strike is starting to make me nervous with some technical indicators showing bullish, however the market stopped at the 20-day ma and there are the following resistance points.

resist. 1293.67 8
resist. 1286.41 8
resist. 1281.33 4
resist. 1273.06 6
http://tinyurl.com/zz8nz

What is everyone's thoughts after the Fed meeting?? If Bernake buries his head in the sand to inflation and says no rate crank on 8/8, isn't the SPX going to snap-up quickly? Futures show +1.25 right now on OX login page.

Oh and enjoy one of my fav JA pics :D
http://tinyurl.com/kj9ar

Rookie Rich
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I'll stick my neck out a bit.

Right now I'm saying there will be one more big jump. The expectation of a pause is really high right now and will probably get higher. The long/intermediate term picture is down though. I don't really care because I don't adjust simply because the short is threatened. For those who employ the adjust early strategy, I would follow OC's guidelines and trade cautiously. If I were trading that strategy I would probably opt for the 1310/1320. Strongest resistance seems to be at 1310.

Personally I'm looking at the 1290/1295 if I can get a good credit.:eek:
 
Rich, based on my time with the SPX and I also trade IC's, you spend the whole month worrying about one short (in this case the 1300) then a few days before expiration...holy crap...market makes a bee line for the other short:eek: :p While I agree with Cache that we are heading up in the short term (few more trading days) I think all bets are off on the market when the Fed speaks. If you have a good overall credit on your IC then you just have to stomach the roller coaster ride making your plans for adjustments or rolls or whatever...and I'm sure with your offerings (Ja) you'll have everyone...even coach weighing in:D
 
Quote from Maverick74:

Haircut on the SP is 6% to the upside and 8% to the downside. Yes, it is fixed. The problem with span is it's variable margin. Meaning it can go up on you without notice and force a liquidation. And it usually happens at the worst possible time during a big selloff. I've seen span margin double overnight. And if you can't meet it, they liquidate. Span also does nothing for the long gamma trader. In other words, when you buy options, you have to pay 100% of the premium. Span is only useful if you sell naked options.

Also with span, you can't mix and match products. If you trade ES options, you will get relief on your margin if you trade ES futures against it, but nothing else. With a haircut, you can trade, spy options, es options, spx options, oex options, spyders, even dow, nasdaq, russell options and futures and ETF's and get haircut relief on all those products as one big position.

There really is no comparison between the two. Span is very limiting. Haircut and cross margin is much more flexible and all encompassing.
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mav, i have 12 years writing, spreading etc. so my question is based on that background.
i am guilty of being a large span user, and intend on staying in this game indefinitely. so...... can you guide me to where to start the process of obtaining haircut status? i am clear that it may not be easy, but i am sure many here would appreciate your opinion on whether it is possible and how to start.
 
Quote from domestic:

mav, i have 12 years writing, spreading etc. so my question is based on that background.
i am guilty of being a large span user, and intend on staying in this game indefinitely. so...... can you guide me to where to start the process of obtaining haircut status? i am clear that it may not be easy, but i am sure many here would appreciate your opinion on whether it is possible and how to start.
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From what I have gathered on this board Maverick owns/runs/manages (not sure which) a prop firm. As you probably know, a prop firm is where you will be able to get haircut margin. I'm not familiar with any of them but I know if you do a quick search on ET you will find a number of them mentioned in different threads.
 
Actually on a surprise visit to Chicago I learned that Maverick is actually the coffee guy in the lobby of where a few prop firms are located :D

To echo the below, a haircut can be gotten at a prop firm willing to give it so it just involves looking around to find the best one that suits your needs.


Quote from ryank:

From what I have gathered on this board Maverick owns/runs/manages (not sure which) a prop firm. As you probably know, a prop firm is where you will be able to get haircut margin. I'm not familiar with any of them but I know if you do a quick search on ET you will find a number of them mentioned in different threads.
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I have an August 1350-1280 put vertical debit spread that I got for 64 back when the SPX was much lower than it is now. I think that the market head lower, but I want to protect the upside that is now being threatened.

Yesterday afternoon the the mid on a Sept 1260 (long) / August 1300 short was about $12.50. I am calculating that if the market continues to rise, but stays below 1300 then I just need the Sept 1260 to be at $1.50 for breakeven? (Above 1300 is still a problem, but it is a bigger problem with my current position.) It also seems that between 1280 and 1260 that the September 1260 long will be of comparable value to the August 1280 short especially if the VIX goes up. The only real downside to this adjustment is a big drop where the 1280-1260 reaches its maximum loss of 20. The full loss of 20 seems unlikely given that VIX would be up and the long is out a month and it will probably be possible to get out before the maximum is lost.

Anyway this seems better than I would have thought and hence I must be missing something. Any comments would be appreciated. Thanks.

Chip
 
Quote from optioncoach:

Same margin but definitely not the same risk. Also, your broker will not need to call you early out of a SPX spread but a huge swing in the ES futures and IV might get you a broker call on your short ES puts and a tidy loss.

So in addition to comparing the initial margins, factor in the max risk as well to determine if the reward is worth it.
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Good point Coach, Have to make sure that its done waay below my margin available levels. Even with SPX i do not use my full margin available. Well not yet anyway :)
 
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