SPX Credit Spread Trader

I am starting to get charged Exchange Fees on SPX Index Options by OE and was wondering if others are seeing this too. I don't know if OE was just waiving the charges in the past and not now or if there is a change by the CBOE or something else. OE just started to self clear so perhaps this is the change. I do have a dialog with someone there, but I am just checking with other SPX Options traders. Not a big deal, but thanks for any help.

Chip
 
They might have been waiving them or commissions were covering them but if they are clearing now themselves they may have added costs and decide to now pass the fees on.

Quote from Chipper7:

I am starting to get charged Exchange Fees on SPX Index Options by OE and was wondering if others are seeing this too. I don't know if OE was just waiving the charges in the past and not now or if there is a change by the CBOE or something else. OE just started to self clear so perhaps this is the change. I do have a dialog with someone there, but I am just checking with other SPX Options traders. Not a big deal, but thanks for any help.

Chip
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BY the way I just saw that the NFA has free resources on futures options including a workbook and PDF manuals. I have not had a chance to check them out but the I saw a list of titles and it appears to have some really good FREE info and resources.

Something to look into for those wanting to do spreads with the futures options.
 
Quote from optioncoach:

BY the way I just saw that the NFA has free resources on futures options including a workbook and PDF manuals. I have not had a chance to check them out but the I saw a list of titles and it appears to have some really good FREE info and resources.

Something to look into for those wanting to do spreads with the futures options.
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Coach,

Thanks for the info. Just checked and it is a good intro for futures and future options.

To see if I can apply the same spread strategy in future options, Let me explain the way I will go.

1. Suppose I like to trade a diagonal SPX Jan x/Feb y call spread, where x and y are the strike prices.
2. I will find the equivalent future strikes x1 and y1 where it is calculated from x and y using future discount formula (x1, y1 will be higher than x and y).
3. I will monitor the spread as if it is spx jan x/feb y position and will adjust according to the same rule as spx spread.

Since future options are settled by future contracts, I don't have to worry about pin risk. Am I right?
 
Yes and no on the fop expiration. There is no jury-rigged SET value to bite you in the ass. However, the futures options expire on Friday, not Thursday. So if you are holding to expiry, you will have the options until the end of RTH on Friday.

The options are settled with futures contracts, so if you exercise or are assigned, the contracts will show up in your account on Monday.

Regarding using SPX to trade SP/ES, it is perfectly reasonable to do so, depending on your time frame and distance itm/otm. Just keep PREM in mind, which you are.

Quote from yip1997:

Since future options are settled by future contracts, I don't have to worry about pin risk. Am I right?
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Quote from yip1997:

Mark,

The fill for RUT is tough. My feb 730/720 put spread got filled at 0.9 when the mid was 1.1. It was 20 cents more than the mid.
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Yip,

It seems to me that the MMs don't seem to care anymore. I offered at 90 cents when the market was 70 cents bid, 1.20 offered. Not a nibble. Not even a 75 cent bid. Nada.

I did a bit better when opening a few Apr/Mar positions, but they don't pay anything near the midpoint.

I'm still willing to play the game, but it is getting more difficult.

Mark
 
Quote from dagnyt:

Yip,

It seems to me that the MMs don't seem to care anymore. I offered at 90 cents when the market was 70 cents bid, 1.20 offered. Not a nibble. Not even a 75 cent bid. Nada.

I did a bit better when opening a few Apr/Mar positions, but they don't pay anything near the midpoint.

I'm still willing to play the game, but it is getting more difficult.

Mark
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Mark,

You are right. The bid and ask didn't change with my order sitting there. I am still focusing on RUT as it gave me pretty good return for the last several months, but this market situation will significantly reduce my return.

Wonder if it will be better with er2?
 
I was able to get within a nickle of the midpoint of bid/ask on the SHARES RUSSELL 2000 INDEX FUND (IWM) at the January 2007 76 put (IOWMX) January 2007 73 put (IOWMU) strikes. I think its a gonna be a winner too given the good technical support of its 50 day moving average.

By the way one of the problems everyone seems to be having with getting reasonable returns seems to be perfectly expressed at the link below. It takes a minute to load but it well worth listening to since I think it sums up precisely what the major global challenge is and should give a hint to where the smart money is going to be headed. Lock & Load while you still can...

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TS
 
I think your 730/720 February Credit Spread is very daring.

I do have 40 740/730 Jan PUT Spread and I am worried about it.

It's also your trading style. I am at Jan 770/760 and feel very comfortable.

I am watching 780 swing point. Once RUT close below 780 MA(50) I think the freefall will be for reel.

So be carefull.

We are on the same boat though. I trade only RUT. I don't see too much upside and I like what it has been doing 798->775 channel. As long as it can remain in this channel, I am ok.

Good luck.

Quote from yip1997:

Mark,

The fill for RUT is tough. My feb 730/720 put spread got filled at 0.9 when the mid was 1.1. It was 20 cents more than the mid.
More...
 
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