SPX Credit Spread Trader

Get out with your profits now, how many months of a strong uptrend do you need to be convinced the market nas legs like a centipede. I got caught at the end of Sep with my diagonal and I stayed out of the way ever since. certainly was the right call lol...



Quote from ryank:

My DD is getting crushed this afternoon with the strong push higher. Another month, another large move upward just a little too fast. Only a few days to SET and I have another decision to make, hold on or get out with my profit now. Lots of theta still and lots of vega too if we get a quick dip. Decisions, decisions, decisions!
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No, if I added a call partial hedge then you would bet the farm and go short and make a ton of money.

I am just staying out of the way of the freight train. In fact I bought me a few tickets with long ES and EW bull call spreads :)


Quote from dagnyt:

Thanks Coach. I needed a sell signal (g).

Mark
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Quote from optioncoach:

I think I will just cancel my open order to sell 1305 put spreads for DEC lol.... I tried every dip these past weeks to grab DEC aggressively but no bites, no way in hell I am selling any calls the rest of the year..
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coach did you close out your CTM 1365/1370? spread?
 
This market is event driven. It took off today after weak inflation implications of a weak producer price report (PPI) and a FED official making statements implying inflation looks tame. There is another report tomorrow and the rest of the week that could reinforce this trend or turn it. But this just confirms to me that there is a hell of a lot of sidelined cash and buying pressure locked and loaded and ready to squeeze on any excuse to cap the shorts/bears...

Personally I hate SET weeks since it always seems to hinge on important meetings that week and then we have the mysterious synthetic open where the settlement druids spin their magic to screw as many people gambling on SET as they can with a counter market motion spike. It never seems to fail...

Wed. November 15 10:30 Crude Inventories 11/10

Wed. November 15 02:00 FOMC Minutes 10/25

Thu. November 16 12:00 Philadelphia Fed Index Nov

Thu. November 16 09:15 Industrial Production Oct

Thu. November 16 09:15 Capacity Utilization Oct

Thu. November 16 08:30 Jobless Claims (Initial) 11/11

Thu. November 16 08:30 Core Consumer Price Index (CPI) Oct

Thu. November 16 Consumer Price Index (CPI) Oct

Fri. November 17 08:30 Building Permits Oct

Fri. November 17 08:30 Housing Starts Oct

TS
 
no it was an all or nothing position. When the market hit 1362 the bid ask spread on the SPX was bending me over so I never got filled on my limit order. So since the reward was greater than the risk I just let it go. I will close it out before thursday close so I do not have to deal with SET/assignment.

Quote from RichardRimes:

coach did you close out your CTM 1365/1370? spread?
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Quote from TrendSailor:


Personally I hate SET weeks ... where the settlement druids spin their magic to screw as many people gambling on SET as they can with a counter market motion spike. It never seems to fail...

TS
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Seems to me there is a long for every short and on balance, no one gets screwed.

As an aside, don't you think that people 'gambling on SET' deserve to get screwed?

Mark
 
Quote from dagnyt:

Seems to me there is a long for every short and on balance, no one gets screwed.

As an aside, don't you think that people 'gambling on SET' deserve to get screwed?

Mark
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Don't you think that traders deserve to get a realistic price that bears some continuity to the prior day's close or resembles the direction and magnitude of SPX at 9:30 EST?.

As for me I think that traders should have an expectation of an opening price that resembles the real market(s) open(s) at 9:30 EST (or prior day's close at 4:30 EST if a west coast market) and have confidence that: 1) No market maker or hedge fund or well capitalized entity is manipulating the thinly traded pre-market(s) trading; or 2) is maximizing the MM trading book profit by counting the final number of open contract positions and moving SET unnaturally to offset book imbalances to result in no specialist net losses. Admittedly this internal area of the market is fuzzy to me though.

Who knows what is going on "in committee" and what the real market driven bid/ask prices are at the open? It seems to me SPX should be handled like OIX and it should be defined as the final closing Wall Street bell price with a PM settlement on the Friday before expiration.

Do you know why SPX settles this way? The real question I have is why have a synthetic open at all if it can open the system up to being gamed?

Bottom line: I guess you can tell I don't trust the legitimacy of SET formation free of manipulation since the gap up/downs are often 180 degrees out of phase with the SPX open at 9:30 EST.

TS
 
Quote from TrendSailor:

Don't you think that traders deserve to get a realistic price that bears some continuity to the prior day's close or resembles the direction and magnitude of SPX at 9:30 EST?.

I'd prefer that it happened that way. But it doesn't. And every player knows the rules. And how about this point: After 9/11 (or any other world-shattering event) are the markets not supposed to gap lower (or higher) just to provide somone like you with continuity?

As for me I think that traders should have an expectation of an opening price that resembles the real market(s) open(s) at 9:30 EST (or prior day's close at 4:30 EST if a west coast market) and have confidence that: 1) No market maker or hedge fund or well capitalized entity is manipulating the thinly traded pre-market(s) trading; or 2) is maximizing the MM trading book profit by counting the final number of open contract positions and moving SET unnaturally to offset book imbalances to result in no specialist net losses. Admittedly this internal area of the market is fuzzy to me though.

You have no perception of reality.

First, the pre-market prices have ZERO to do with the real opening. If the order imbalance that resulted in a pre-market move disappears, so does the price movement.

If someone is pushing prices higher in an attempt to boost SET, a normal-sized seller would kill that attempt at manipulation. The NY specialist is not going to take down stock at an elevated price just because some joker tried to run it up pre-opening.

How in the world can you say that there is a 'realistic' 'real market' at 9:30 AM, when many of the stocks that comprise an index have not yet opened for trading? I remember once that PFE had very bad news on SET morning and opened many hours later. Are you suggesting that SET should not have taken the PFE price plunge into consideration and just established SET by using the prior day's closing price? That would be unrealistic. That would provide a SET price that did not even come close to resembling the real market.

And here a good question for you. Do you have any idea how much buying power it takes to move markets? Do you think someone 'counts' 'the market maker trading book' and then buys millions of shares in many different companies just to get a good SET price? There is no MM trading book. There are bunches of competing MMs (in reality, a bunch of competing firms) that don't always have the same positions. And if they did, and if they conspired to move the morning markets, how much of a loss do you suppose they would take by turning around and trying to unload all the stock they just bought in an attempt to move the markets.

Uniformed people see conspiracies everywhere.

Who knows what is going on "in committee" and what the real market driven bid/ask prices are at the open? It seems to me SPX should be handled like OIX and it should be defined as the final closing Wall Street bell price with a PM settlement on the Friday before expiration.

Do you know why SPX settles this way? The real question I have is why have a synthetic open at all if it can open the system up to being gamed?

Sure, I'd like that also, but for some reason (unknown to me) that is not the way it was established. And you knows the rules, so you are not forced to 'gamble'.

Who says the system can be gamed? Where is proof that it has ever been gamed? I hate the SET process, but I either cover my posiitons, or live with it. My choice. You have the same choice.

Bottom line: I guess you can tell I don't trust the legitimacy of SET formation free of manipulation since the gap up/downs are often 180 degrees out of phase with the SPX open at 9:30 EST.

TS

The sudden change of direction does make it look like the longs are buying. But if they are long index calls and are trying to boost the market, what are they goijg to do with all the stock they just bought to manipulate the markets?

If you don't like the rules, just cover Thursday afternoon. What's so wrong with that idea? And don't tell me you don't want to pay the residual premium in the options. That premium is there for a very good reason.

Mark
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Quote from dagnyt:
If you don't like the rules, just cover Thursday afternoon. What's so wrong with that idea? And don't tell me you don't want to pay the residual premium in the options. That premium is there for a very good reason.

Mark
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What's wrong with that? It more a matter of principal. When hanging tough on a late breaking market major move against you in the last few hours of trading I just hate the idea of paying yet another friggin commission to close out :D when I am 7 points oom near the bell & I have to flip a coin on closing due to the distant chance of a wild SET gap into the money on Friday's SET. There does not seem to be any intelligent way to predict or estimate by market behavior what we are going to be in for at the open. Theoretically it could be a 100 point gap up or anything and thats just nuts. It makes an expiration play on SPX extremely risky for anyone and that is when we tight premium players bank our small wins so closing costs are important. All we have are the average SET historical data with fairly large sigmas to go on. I'd play OIX more often except the premiums are so low...

TS
 
Quote from optioncoach:

Get out with your profits now, how many months of a strong uptrend do you need to be convinced the market nas legs like a centipede. I got caught at the end of Sep with my diagonal and I stayed out of the way ever since. certainly was the right call lol...
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With the market closing above 1390 I chose to get out of the way of this train (still kicking myself for not opening the CTM put credit spread last week). I put in some aftermarket orders and got filled pretty quickly. I saw too many ways for me to lose my profit after such a good run this month. Better to have a small profit than let my winner turn into a loser at this point.

I'm looking at an SPX and a RUT diagonal for Dec/Jan:

SPX Dec 1325/ Jan 1350 puts
SPX Dec 1450/Jan 1475 calls
possible Dec 1390/Jan 1380 put tent pole

RUT Dec 750/Jan 730 puts
RUT Dec 830/Jan 850 calls
possible Dec 770/Jan 750 put tent pole
 
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