SPX Credit Spread Trader

[dagnyt]

Quote from Crucis:

Even with the wide b/a, you can still make money.

That's absurd.

You might as well say - if you buy before it goes up and/or sell before it goes down you can make money.

You can make money with any trade any any price - but only if the item you trade makes a favorable move.

Bottom line, unless the margin factor is critical, it's silly to trade an underlying with with wide b/a spreads when there is a liquid alternative.

Mark

 

[dagnyt]

Quote from ryank:

Doesn't SPX technically expire on Friday? You can't trade them after 4:15 on Thursday, they settle on Friday. So once the settlement number comes out expiration on those options is complete and you can get your margin released right?

Just look at a CBOE calendar. You will see that the options expire Saturday.

http://www.cboe.com/AboutCBOE/xcal2006.pdf

Mark

 

[momoneythansens]

Quote from dagnyt:

You might as well say - if you buy before it goes up and/or sell before it goes down you can make money.

Doh! The secret edge is out.

 

[cdowis]

Anyone heard anything recently on penny pricing for options?

 

[yip1997]

Quote from dagnyt:

Just look at a CBOE calendar. You will see that the options expire Saturday.

http://www.cboe.com/AboutCBOE/xcal2006.pdf

Mark

Mark,

It is interesting. I thought index settles on Friday am. How come the expiration date is Sat? Am I wrong that they settle on Friday open?

 

[dagnyt]

Quote from yip1997:

Mark,

It is interesting. I thought index settles on Friday am. How come the expiration date is Sat? Am I wrong that they settle on Friday open?

Youa re NOT wrong. They settle on Fri at the opening price of EACH of the individual components in the index. They DO NOT settle at the opening price of the index. However, they expire on Sat.

Equity options also expire on Sat. I believe it was just easier for the industry to have a single expiration date.

Although TOS apparently releases margin on Friday, I know of no other firm that does that. But, all one has to do is ask to find out.

Mark

 

[ffa99]

optionsXpress will also release margin. Just have to call or use the live help messenger.

Quote from dagnyt:

Youa re NOT wrong. They settle on Fri at the opening price of EACH of the individual components in the index. They DO NOT settle at the opening price of the index. However, they expire on Sat.

Equity options also expire on Sat. I believe it was just easier for the industry to have a single expiration date.

Although TOS apparently releases margin on Friday, I know of no other firm that does that. But, all one has to do is ask to find out.

Mark

 

[yip1997]

I have a question regarding margin requirement.

Currently I have 10 contracts of RUT Aug 650/640 Put spread, and so my current margin requirement is 10K.

If I am going to open 10 contracts of RUT Sep 740/750 call spread, do I need an additional margin req of 10K.

Please note that they expire at different date. If I don't need additional fund, I might consider selling call spreads to start earning time premium.

 

[damon_achey]

Quote from yip1997:

I have a question regarding margin requirement.

Currently I have 10 contracts of RUT Aug 650/640 Put spread, and so my current margin requirement is 10K.

If I am going to open 10 contracts of RUT Sep 740/750 call spread, do I need an additional margin req of 10K.

Please note that they expire at different date. If I don't need additional fund, I might consider selling call spreads to start earning time premium.

I would contact your broker to find out. But most I know will not do this due to the differing expirations.

 

[RichardRimes]

Quote from dagnyt:

Why not short SPY instead. Stick with the ETF that has better liquidity.

Mark

The problem is I can't short stock in an IRA ..I can and do buy puts but would rather do something like this (I think). In the cash account I am buying and selling (swing)ES. Also with a 2:1 inverse it is better than just buying puts. One thing about margin releasing...even with TOS although my margin is released on Friday I can't actually use it until Monday (its not in the "daytrade" balance). They might let me use it if I called...haven't needed to so far. This again is only in the IRA....cash side I can use it as soon as its released.