SPX Credit Spread Trader

Quote from dagnyt:

Hope it works for you.

I find that it hurts to close, but becaue it limits losses, it makes the overall strategy successful. And that's the bottom line.

Mark
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Hi Mark,

It does hurt a little but im trying to be mechanical about it and stick to my plan of closing when the underlying hits my short strike and I have done it :) Like you said, it doesn't feel too bad when you have other positions working for you at different strikes. Just hope that the market doesn't keep going up and hit those too.

I've opened a small positiion higher up OCT1390/NOV1425 credit diagonal and received 2.85 credit.

Thinking of opening a small put credit diagonal but don't like doing it after such a strong jump in the market. Maybe just a small one to balance it out a little and open more if and when the market comes back down.

rdemyan,

I've closed my position for 4.50 debit. Couldn't take the pain any more. Here's the numbers

ES ~ 1358.75

OCT1360 10/10.50 ba filled -10.25
OCT1370 5.50/6.00 ba filled 5.75

In this case I managed to get filled in the mid for both legs. Can't put in a spread order with ES at IB. Have to leg in separately. Quite easy once you get used to it. However spreads can be entered with SPX in IB.

Net debit 4.50

One week ago I priced to close for about 5.00 if shit hit the fan but managed to close for 4.50 today. A litte of decay i suppose.

Just like coaches' hedges, bet the market will fall tomorrow after i've closed my 1360/1370 :mad:

Cheers
 
Scoobie:

Thanks for posting your trade.

I have a question on your strategy for closing at the short strike. I thought that this was roughly the strategy for a diagonal but not a pure vertical credit spread (i.e close the vertical earlier). Since the maximum profit on a diagonal occurs at the short, you can allow it to run and even exceed the short strike. But, I thought, this generally isn't recommended for a vertical.

Comments on this anyone?

Quote from scoobie27:

Hi Mark,

It does hurt a little but im trying to be mechanical about it and stick to my plan of closing when the underlying hits my short strike and I have done it :) Like you said, it doesn't feel too bad when you have other positions working for you at different strikes. Just hope that the market doesn't keep going up and hit those too.

I've opened a small positiion higher up OCT1390/NOV1425 credit diagonal and received 2.85 credit.

Thinking of opening a small put credit diagonal but don't like doing it after such a strong jump in the market. Maybe just a small one to balance it out a little and open more if and when the market comes back down.

rdemyan,

I've closed my position for 4.50 debit. Couldn't take the pain any more. Here's the numbers

ES ~ 1358.75

OCT1360 10/10.50 ba filled -10.25
OCT1370 5.50/6.00 ba filled 5.75

In this case I managed to get filled in the mid for both legs. Can't put in a spread order with ES at IB. Have to leg in separately. Quite easy once you get used to it. However spreads can be entered with SPX in IB.

Net debit 4.50

One week ago I priced to close for about 5.00 if shit hit the fan but managed to close for 4.50 today. A litte of decay i suppose.

Just like coaches' hedges, bet the market will fall tomorrow after i've closed my 1360/1370 :mad:

Cheers
More...
 
Quote from momoneythansens:

Are you talking about collars here (matching tenor on the CALLs and PUTs) i.e. synthetic bull verticals: limited risk/limited reward?

I'm missing the connection with haircut :confused:

If you don't want to deal with the e-mailing you can always upload your presentation to a file hoster such as www.filefactory.com or similar (Google: free file hosting)

MoMoney.
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Murray, nevermind. I had a look at the presentation from the link provided by Damon. I see the PUTs and CALLs were different tenors.

Excellent presentation.

MoMoney.
 
Quote from rdemyan:

I thought that this was roughly the strategy for a diagonal but not a pure vertical credit spread (i.e close the vertical earlier). Since the maximum profit on a diagonal occurs at the short, you can allow it to run and even exceed the short strike. But, I thought, this generally isn't recommended for a vertical.

Comments on this anyone?
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First, I don't believe in accepting anyone else's hard and fast rules. Decide what works for you and continue to use it.

Second, yes, for intelligent risk control, straight verticals should be closed earlier. that results is more frequent losses, but (the major key point) those losses should all be tolerable.

Third, when the strike is breached, even diagonals are dangerous. IMHO, they should be closed.

My theory is that selling premium provides plenty of profits. To survive, all losses must be limited.

Mark
 
Quote from optioncoach:

Tomorrow I will be grabbing deep OTM call spreads for NOV :D
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Coach, Hope the market doesn't keep moving higher after you open your call spreads cause i'll be hurtin too if it does :)

Edit: Congratulations on keeping your losses small after such a crappy month.
 
What weighs heavier when deciding to open a DD? Volatility or market feel?

Meaning, everyone "feels" that the market is over bought at this point and I have that feeling as well. If the market corrects a good bit, it seems like the put side of the DD could get hit pretty quickly. But of course, w/ the vols this low, folks are looking to do a DD due to the rising volatility "bonus".

It seems like the stars would be more aligned if the market was in a low vol trading range instead of a strong upward trend.

What am I missing?
 
Quote from rdemyan:

Scoobie:

Thanks for posting your trade.

1)I have a question on your strategy for closing at the short strike. I thought that this was roughly the strategy for a diagonal but not a pure vertical credit spread (i.e close the vertical earlier).

2)Since the maximum profit on a diagonal occurs at the short, you can allow it to run and even exceed the short strike. But, I thought, this generally isn't recommended for a vertical.

Comments on this anyone?
More...



1) No specific reason but had pre planned to close at the short strike weeks ago. Does not mean I'll do this all the time. Might change it back to closing 10 pts from the short strike. Edit: But the main thing I learned is that i followed on my plan without getting too nervous.

2) Some of my diagonals are credit diagonals. For credit diagonals i don't want the market to run to towards the shorts too quick. Credit diagonals go in the red similar to credit verticals as the shorts are threatened. Depends on how much credit i initially open them for.

My strategy is similar with Mark's but with my own intricacies as I don't fully know what he does exactly :)

Mixing it with Murray's debit diagonals too. So im still on a steep learning curve but still making money :)

Well im signing off for the day and will reply tomorrow if needed

Cheers
 
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