SPX Credit Spread Trader

Mark, do you know what the current trading standards are for the minimum number of contracts that are guaranteed to transact at the current ask price? Is it 10 or 20 for SPX?

I am having a hell of a time stepping into Feb positions and had to drop my order sizes down and do it 10 or so contracts at a time just to get something going for next month.

TS
 
Quote from TrendSailor:

Mark, do you know what the current trading standards are for the minimum number of contracts that are guaranteed to transact at the current ask price?

TS
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Sorry, I have no idea what the rules are today. With those wide markets, they should guarantee 100-up, but they don't.

Mark
 
Quote from piccon:

Yip,

Ineed some exit strategy. I know when to get in but not how to get out (too greedy). So this is my new rules:

On CTM, ITM I will exit at (Premium *1/3) -0.10 c
On OTM: Exit=(Premium*2/3) - 0.10c

the 10c representsent cost of trading fees. So I will be guaranted 1/3 of the premium for CTM and 2/3 of the premium for OTM.

What do you think.?

I want to be able to take profit as they come so I don't end up fighting over a few cents close or at expiration. Also that will allow me to place my closing order the same day I opened it.
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I think Mark, Jeff and Cache have all provided good exit strategies.

If my preceived edge is short-term directional outlook, here is what i will do assuming you have opened CTM call verticals.

Case 1: the market continues to move up quick:
This is the hard part. You are losing quick because of the delta, and gamma. You probably should use your current exit strategy to cut loss. Any other suggestions?

Case 2: when the market has stalled or reversed:
If your outlook is neural, see if you have any better opportunity (compared to current r/r, pop, current profit, reserve margin for future opportunities etc) to determine if you want to hold or exit (use Mark's or Cache's idea)

Case 3: when the market has bottomed: exit call, and enter put vertical (same as Jeff's idea)
 
everyone and their dog sells on expiration friday and I see massive price pressure on that day, as much as 20 percent. the following monday is usually better.
 
Thanks Cache, Yip, and Jeff.

I tend to let time do it's things and most of the time I lose some of the profit becvause RUT is so volatile. You can make good money in 2-3 days but you have to be ready to close because the going up may be as furious as the going down.



Quote from yip1997:

I think Mark, Jeff and Cache have all provided good exit strategies.

If my preceived edge is short-term directional outlook, here is what i will do assuming you have opened CTM call verticals.

Case 1: the market continues to move up quick:
This is the hard part. You are losing quick because of the delta, and gamma. You probably should use your current exit strategy to cut loss. Any other suggestions?

Case 2: when the market has stalled or reversed:
If your outlook is neural, see if you have any better opportunity (compared to current r/r, pop, current profit, reserve margin for future opportunities etc) to determine if you want to hold or exit (use Mark's or Cache's idea)

Case 3: when the market has bottomed: exit call, and enter put vertical (same as Jeff's idea)
More...
 
Double Diagonal using Haircut vs. Retail


Just thought an update was in order.

We had an awesome 2006 as retails traders here at the Grand Rapids Investment Club, as many of you are aware, but this year we will be trading along side our recently opened Hair Cut account.

We have placed identical Double Diagonals on the RUT

Retail Account: $21.75 debit for all 11 legs
HairCut Account: $19.00 debit for all 11 legs

The floor broker we're working thourgh has worked some nice fills. Each one has been at MID or better at the time of entry. The positions were filled within the same 24 hour time frame... with a slight movement in the market.

Current Retail Account Margin: $500K
Current Hair Cut Margin: $200K


You can interpret the margin differences (uses) two ways...

1. You could place larger positions with the HC account, hence receive greater return for the same capital.... or take off the position at a smaller % profit which would then yeild the same % profit of the Retail Account... or

2. Use the reduced margin requirement to hedge against any future risk.

We chose the later... but may decide to use a combination of the two going forward.

Couple Observations:

1. Floor Brokers are not your friends, they are out to make a living off you.

2. Professional trading platforms are not necessarily any better than retail... in particular for slow evolving positions.

3. Floor Broker assistance/language/communication is a learning process.

4. So far, the use of a direct floor broker has been a positive experience.


We'll keep you updated!

Murray
 
Murray, Thanks for the update. Glad its working well for you and your group. Interesting comments on floor brokers. Is the floor broker you work with just "yours" or does he represent several other clients? How does he make his living "off" of you? Is it in scalping the trades? thanks :)
 
Quote from Sailing:

Double Diagonal using Haircut vs. Retail

The floor broker we're working thourgh has worked some nice fills. Each one has been at MID or better at the time of entry.
Murray
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Hi Murray,

Well done.

I love your fills and am quite jealous. Not only am I unable to get anywhere near MID, lately I cannot get anything done when I am entering orders thnat are only an incredible 10 - 15 cents better than the natural bid/ask!

On which exchange are you using the broker? ISE or CBOE?

Thanks

Mark
 
Quote from dagnyt:

Hi Murray,

Well done.

I love your fills and am quite jealous. Not only am I unable to get anywhere near MID, lately I cannot get anything done when I am entering orders thnat are only an incredible 10 - 15 cents better than the natural bid/ask!

On which exchange are you using the broker? ISE or CBOE?

Thanks

Mark
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Murray can thank me for those fills. :D

I worked the orders for him through our floor broker on the CBOE. As Bogart once said, "this is the beginning of a beautiful friendship". :)
 
Quote from RichardRimes:

Murray, Thanks for the update. Glad its working well for you and your group. Interesting comments on floor brokers. Is the floor broker you work with just "yours" or does he represent several other clients? How does he make his living "off" of you? Is it in scalping the trades? thanks :)
More...

Floor brokers have many clients. Very seldom do they have only one customer they service. They make a living how all brokers make a living, they earn a commission. No, they don't scalp your trades. They simply facilitate order flow.
 
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