SPX Credit Spread Trader

[El OchoCinco]

Finally.... somebody gets me!

Also you must know I never get upset at making over 8% in a month

Quote from ryank:

Coach doesn't guess at reversals, he creates them when he hedges or closes a postion .

 

[El OchoCinco]

Yes the EW options are the S&P options on futures that expire at the end of the month. They have less volume than the ES and slightly wider b/a but you can shave them like you can with ES options since they are electronically traded. I try and shave a tick or two when I can .

Quote from scoobie27:

Coach,

Is the the EW the options that expire at the END of each month? I had a look at them in IB but there virtually no volume traded on them even though there is a bid and ask. Do you just trade the EW at market ? (ie buy at the ASK and sell at the BID)

Thanks

 

[scoobie27]

Quote from optioncoach:

Yes the EW options are the S&P options on futures that expire at the end of the month. They have less volume than the ES and slightly wider b/a but you can shave them like you can with ES options since they are electronically traded. I try and shave a tick or two when I can .

Thanks, the reason I asked was that I noticed that there was virtually no volume, whether it was the AUG SEP or OCT EW options. Will have a good look on Monday might start trading them.

Thanks again

 

[tplast]

Quote from ryank:

That's a good point. The diagonal does well with increasing vol but 1275 may be too close for comfort though.

I don't think it is bad when your short strike is hit in a put diagonal. Look for example at the SEP 1310/OCT 1300.

You can convert it to:

1) SEP EW/OCT 1300 calendar for -1.25 debit
2) SEP ES/EW 1310 calendar for +3 credit
3) OCT 1290/1300 put debit spread for +2 credit.

This is without taking into account volatility, but if it moves down to your strike you are probably better off than the above.

 

[kalikahuna]

Hey guys,

So, I have a couple questions.

First, am I correct in assuming that the Sept./Oct. puts can still make profit even though the SPX has moved significantly against you guys since a lot of you spoke up (1296 or so) because you can still roll it to an Oct. credit spread or something right? of course, this assumes it doesnt completely run away to the upside.


Second, I have a Sept. 1330/1345 Call spread, what defensive measures would you guys suggest if the SPX continues to go up when the "big money" returns on Tues and buy instead of sell?...that Pisani guy on CNBC thinks they will, hopefully CNBC is full of S**t like they usually are, and SPX stays in range....hahaha

 

[tplast]

Quote from kalikahuna:

Hey guys,

So, I have a couple questions.

First, am I correct in assuming that the Sept./Oct. puts can still make profit even though the SPX has moved significantly against you guys since a lot of you spoke up (1296 or so) because you can still roll it to an Oct. credit spread or something right? of course, this assumes it doesn't completely run away to the upside.

I have the ES SEP 1265/OCT 1255 and the SEP 1250/OCT 1240. They are both a little bit underwater. But I still think that the main reason why I put the trades is still valid which is that we'll see an increase in volatility by the end of September. I can still roll the SEP ES to SEP EW to lower my cost basis and keep the same trade.

Converting them to an October credit spread would be a completely different trade, with the opposite goals as the original. For now, the plan is to close the trade and take my loss at EW expiration if my reasoning is wrong.

 

[ryank]

Quote from kalikahuna:

Hey guys,

So, I have a couple questions.

First, am I correct in assuming that the Sept./Oct. puts can still make profit even though the SPX has moved significantly against you guys since a lot of you spoke up (1296 or so) because you can still roll it to an Oct. credit spread or something right? of course, this assumes it doesnt completely run away to the upside.

I am looking at that over the weekend. I could bank some profit by closing the short Sep puts and roll to Oct credit spreads. Maybe roll the Sep 1250/Oct 1225 into a Oct 1225/1235 credit spread. This allows me to keep the profit I gained from the Sep 1250 put and open the new credit spread in Oct for additional profit if all expire worthless. Could close the Sep1275/Oct 1250 spread for a profit now. My call diagonal is pretty profitable right now but want to keep it as the market is moving towards my short strike and time is ticking. Another option I have is to try to adjust my 1275/1250 puts and 1325/1350 calls into an iron condor and then into 2 butterflies for b/e or possibly a credit, now that would be something. I've heard it can be done, doubt I could pull it off though.

 

[El OchoCinco]

I am loving the diagonals for the calls using the futures options.


Still not loving the put diagonals due to the debits but maybe I can massage the strike selections a bit and reduce my debit or find credit situations (rpobably too much risk).

 

[cdowis]

Quote from ryank:

Coach doesn't guess at reversals, he creates them when he hedges or closes a postion .

I was talking to myself and anyone else who gets frustrated when they get stopped out of a position and then see it go back in their direction.

Optioncoach obviously needs no advice from me.

I console myself with the thought: If I follow a sound trading plan and exit rules, in the long run, I will survive. And guessing market reversals, tops and bottoms, is not a sound exit rule, except, for a very fortunate few.

Just forget it, and move on.

Quote from optioncoach:

I am loving the diagonals for the calls using the futures options.

I have a sep/oct 1260/1240 put spread on the SP. The vix has gone down, the market has moved it deep underwater, and still at break even.

And even it loses on the short term, I can roll it on Oct long, e.g. a vertical, or simply a lottery ticket.

Have used this strategy for a couple of months, and its characteristics are truly low to moderate risk for the SP, compared to my sleepless nights nursing the IC. Just my style.

 

[momoneythansens]

Quote from cdowis:

1. Did you follow your trading plan?

2. If so, do you want to change your trading plan for such situations?

Sounds to me that you are upset with yourself because you cannot guess market reversals.

Holding the unhedged long CALLs overnight can't have been part of any trading plan IMO.

It was a gamble. If futures sold off heavily overnight a different story would have been told. If it wasn't luck but rather skill to hold onto the naked long CALLs then perhaps there is a better way to leverage those directional skills?

In short, the overnight risk was not a neccesary component of the diagonal trade. The long leg could have been closed at the same time as the short leg. Or alternatively, the short leg could have been rolled into another spread.

2 cents.

MoMoney.