SPX Credit Spread Trader

[dagnyt]

Quote from TrendSailor:

I have been prematurely shaken out of a couple winning IC positions this year already.

Suggestion: Have more than one position monthly. Either different strikes or different underlying. I do that all the time and being forced out of one position may sting, but I know that I have other positions that are still working for me when I close one.

I am trading DD and not verticals, but the risk management ideas apply equally.

Mark

 

[TrendSailor]

Ok you guys are picking on the newbie on the boards. haha - That's OK and normal group dynamics.

I am very philosophically in agreement with "Coach" on risk management being the primary consideration for the long haul. In fact I am looking to find the top 4-5 best strategies for adjusting risk. Anyone have a link to a FAQ condensation? It takes days to read through this whole journal - I got 1/3 through it and had to jump ahead and go live since I am trading and anxious to get involved in the discussions...

Please pardon my "patterns of thought". I just like tossing out provocative ideas to find out who the high priests are and what the real local religion is. I think this is the first time I have been physcoanalysized via semantic analysis. I wish I could read the market like that to understand what it is thinking.

I am curious though. If I change my fonts to extra large and start using nothing but all upper case white space and make my posts much shorter would that mean I am an egotistical introvert or a properly cloistered religious convert to risk management?

Sorry - having fun...

TS

 

[rallymode]

Quote from TrendSailor:

Ok you guys are picking on the newbie on the boards. haha - That's OK and normal group dynamics.

I am very philosophically in agreement with "Coach" on risk management being the primary consideration for the long haul. In fact I am looking to find the top 4-5 best strategies for adjusting risk. Anyone have a link to a FAQ condensation?

No one is picking on you. It is my impression that people are trying to help you since you seem to not have enough clarity on the risk management part of this approach.

As far as adjustments, there are none. That's the easy answer. Take the loss and move on. First, you cannot hedge the cheap gamma you sold in any effective way no matter what you do, much less once your PnL is running negative and second, even if you found a "proper" hedge it will have nothing to do with any positive expectancy or improved probability. Perhaps, if you continue reading the thread from where you left off, you will realize this for yourself. Not to be rude but this is getting silly.

Just my 2 cents.

 

[momoneythansens]

Quote from TrendSailor:

what the real local religion is.

Be mindful of the fact that the respondents are not all necessarily singing with the same voice. There are very distinct and different approaches advocated by the various contributors on this thread. Continue reading the rest of the journal and it should become clear.

A couple of weekends reading for a year's worth of knowledge. That's a good trade.

Bear in mind that any defensive adjustment you make to a credit spread is most likely adding risk to the position.

MoMoney.

 

[TrendSailor]

OK all you guys - thanks a BUNCH. I think I finally GOT IT!

1) Premium on IC is peanuts and NOT generally worth defending.
2) Adjustment mechanisms tend to increase risk with with a disproportionate return on risk-reward.
3) Take smaller losses as early as possible and rejoice that you did not lose a huge part of your core account. This is "normal" business
4) If you want to have opportunity to be active during periods where you took small and early losses then have multiple condors or other systems going on other strikes or calendars and/or other underlying
5) Don't be silly and think you are going to conjure up a better way to game the system since its all been vetted already

I may have missed summarizing a few other points - I'll recheck.

OUTSTANDING ! I think by conservative estimates I just picked up at least $10K-$50K worth of loss avoidance knowledge in less than 24 hours. You GUYS rock!!

I WISH I had this info before I paid my prior subscription service a few thousand of dollars for blind buy sell advise that cost me well over $65K principal loss PLUS $45K in banked profits. I am taking that loss as a positive business cost that drove me here to learn all this.

OK, going back to lurker/learning mode and reading more journal and actively listening...

Thanks,
TrendSailor

 

[Cache Landing]

Quote from optioncoach:

Taking a page from the CTM foks....

My technicals show we could fall to around 1365 which is a moving average area of support or a little more towards 1360 if today;s down day holds. So I sold an ITM call spread to profit the next week or two if we do hit 1360:

STO 10 1370/1365 Call Spreads @ $3.10

Credit = $3,100
Risk = $2,900

Wow! Look out Rally, OC is coming over to the dark side.

Not sure I agree with your analysis, but good luck on the trade. Personally I am looking at 2 more days of churn, and then a 10+ point jump on friday.

But if you are right I will make some money, so win-win for me.

 

[MechTrade]

Been studying the thread for a few days and decided to get back into the saddle with SPX Spreads.

STO SPX NOV06 1325/1310 PUT SPREAD
CREDIT 0.55
17 DAYS REMAINING

SPX was @ 1373.50
ACTUAL RETURN = 3.57% (If expires worthless)
Monthly calculated Return = 6.29%
Annual calculated Return = 75.54%

 

[dagnyt]

Quote from TrendSailor:

I WISH I had this info before I paid my prior subscription service a few thousand of dollars for blind buy sell advise that cost me well over $65K principal loss PLUS $45K in banked profits.

Which susbcription service?

Mark

 

[El OchoCinco]

I do not think we hit 1325 by NOV expiration so it is a good spread to enter with 3 weeks to go.

Quote from MechTrade:

Been studying the thread for a few days and decided to get back into the saddle with SPX Spreads.

STO SPX NOV06 1325/1310 PUT SPREAD
CREDIT 0.55
17 DAYS REMAINING

SPX was @ 1373.50
ACTUAL RETURN = 3.57% (If expires worthless)
Monthly calculated Return = 6.29%
Annual calculated Return = 75.54%

 

[Sailing]

Mark,

Curious if you have done much analysis on buying Put Calendars slightly OTM on a scaleable over time entry approach to your Double Diagonals.

I say this because I'm wondering if this would help negate the gamma run-up at the short ends of the diagonal on a over-time basis.

Any thoughts?

M~

Quote from dagnyt:

Suggestion: Have more than one position monthly. Either different strikes or different underlying. I do that all the time and being forced out of one position may sting, but I know that I have other positions that are still working for me when I close one.

I am trading DD and not verticals, but the risk management ideas apply equally.

Mark