SPX Credit Spread Trader

Not a big deal really... intraday the Euro moves much like the S&P index and is very tradeable. If you have a good set of indicators and entry and exit rules, in theory you can daytrade anything lol. The Fx futures are quite active between 6:30 Am and 8:00 AM (in connection with London trading) so I can get some early morning trading in.

All of my indicators overlay nicely on the Euro futures and most of my trading profits in Aug were from the Euro and Pound :) (whenever baby let me trade). I also have been studying the FX market for the past 3 months so I walked into it nice and slow ;)

Quote from riskarb:

Oh Lord, he's trading fx now.
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Getting better the more I day trade. My bread and butter is still month to month spreads but with futures daytrading I can put more than enough whipped cream and cherries on my trading sundae.

Started out ruogh in May and June but I turned it around and have had some nice consistency the past 2 months. The problem has not been my trading, it has been trading in between feedings lol..


Quote from RichardRimes:

How are (may I ask) your TA skills? doing good?:p and are you using candle stuff?
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OK, I justify this as being on topic because coach said we could ask him questions about his book on here :D

Anyone else, feel free to chime in.

I've been swing trading for a long time and I have a system that I use that does pretty well. In a nutshell, it's long only and I allocate a small % of capital to buying a single stock at a time. Theoretically, I can have 10 open positions at once. I trade low volatility, high volume stocks (that happen to have high option volume as well). They don't usually go anywhere fast. My profit target is 5% and stop loss is really a time based exit (15 days). On a very rare occassion, some of these big boys might slip down 10% or maybe even 15% but due to diversification, I haven't really suffered any significant draw downs. Although it still makes me nervous.

After reading a good portion of your book this weekend, you gave me some things to think about. Again, I have a hard profit target of 5% and no stop loss. Adding a stop loss to my system hurts profitability (but doesn't kill it). Upon reading about collars though, it occurred to me that if I collar a position, I could theoretically set myself up for a 5% profit target and stop loss without actually getting shaken out of the position. Is this correct?? It also occurred to me that this would only work on round lots (and I typically trade a % of my capital, not necessarily round lots). To solve this, could I open a synthetic position and collar it?

Thanks for the great read so far!
 
Bob,

I totally agree with you.

I too feel much more comfortable with Put Diagonal spreads (playing VEGA) and Call Credit spreads (neutralizing VEGA).

While analyzing the SPX movement over the past five years, I have found the movement to the upside to be longer in time frame periods, where as the downside movement may be faster, but not as far. That said, I still find comfort in Put Diagonals on the downside, and Call Credit spreads for the upside.

Although coach has found comfort in his ES / EW credit spreads, he too will come to realize how you and I feel about Put Diagonals.

It's just a matter of time.... baby, wife, .... just a matter of time.

Murray

Quote from blure2:

I was just going to say the opposite thing, Coach. From the standpoint of avoiding the black swan. The market has never had a catastrophic, sudden rise, therefore, call spreads are pretty darn safe. On the other hand, diagonals work well on the put side because they are a more guarded position should the market take a swift tumble.

DISCLAIMER: I am new to this and my advice should be weighted far less than most of the good folks on this forum.

Bob
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lol.... maybe... I guess my first put diagonal was a small loser so I am still gun shy on it :)...

Quote from Sailing:

Bob,

I totally agree with you.

I too feel much more comfortable with Put Diagonal spreads (playing VEGA) and Call Credit spreads (neutralizing VEGA).

While analyzing the SPX movement over the past five years, I have found the movement to the upside to be longer in time frame periods, where as the downside movement may be faster, but not as far. That said, I still find comfort in Put Diagonals on the downside, and Call Credit spreads for the upside.

Although coach has found comfort in his ES / EW credit spreads, he too will come to realize how you and I feel about Put Diagonals.

It's just a matter of time.... baby, wife, .... just a matter of time.

Murray
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Quote from optioncoach:

Not a big deal really... intraday the Euro moves much like the S&P index and is very tradeable. If you have a good set of indicators and entry and exit rules, in theory you can daytrade anything lol. The Fx futures are quite active between 6:30 Am and 8:00 AM (in connection with London trading) so I can get some early morning trading in.
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Coach,

I know, have traded currencies before, both CME and FX.

In theory you can also daytrade S&P off pit, but we both know how it is.

Lots of luck with your currency trades, this will be very inspiring if you make consistent profits there.
 
I am keeping it a small part of my portfolio until my consistency lasts over a long period of time. Right now, I am doing 1 - 5 contract lots with the Euro, Pound, Yen and Swiss Franc so no home runs yet...

Quote from ChrisM:

Coach,

I know, have traded currencies before, both CME and FX.

In theory you can also daytrade S&P off pit, but we both know how it is.

Lots of luck with your currency trades, this will be very inspiring if you make consistent profits there.
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I am a bit confused. OX margins on vertical net credit spread trades on the SPX Index equal $100 per share. Each point difference is $100 so with a 10 point difference my margin is $1,000. If this 10 point spread is ITM at expiration and is exercised by OX will I be charged $250 a point or $2,500. I have read that each point of the SPX index is $250. I am trying to extimate my Max loss if my vertical is exercised.
 
Thank you, I will check this out. What's more, is that it looks like I might be able to get into these trades with a small debit and sometimes a credit. I'm still researching this though.

Thanks again.

Quote from cdowis:

Just to chime in, I found a pretty good webinar on synthetics at chartbender.com. The second one goes into details of adjustments such as the collar, box, etc. http://www.chartbender.com/products/education.aspx
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