SPX Credit Spread Trader

Piccon,

Do you leg in to these spreads or place the orders as spreads?

Kapil




Quote from piccon:


I decided to close my CTM/ITM call for a profit. RUT is showing some strength going to the close. I like when RUT is weaker than SPX but today RUT is stronger.

I opened:

20 RUT FEB 790/800 call @5.30 credit
3 RUT FEB 790/800 call @5.80 credit
31 RUT FEB 820/830 call@ 2.05 credit.

Closed 20 RUT 790/800 call @ 3.75 debit. 1.55 profit. It's good enough for me. 3K profit and FEB has just started.

I will keep my 3 RUT FEB 790/800 call @5.80 credit and the
31 RUT FEB 820/830 call@ 2.05 credit is now worth 0.60. [/B]
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If you are scared or not willing to lose at all, don't even try this.

Alos, timing is key; If you don't know when to get in, you may end up a loser or you will always finish ITM

Quote from polpolik:

Yip,

i'm still a little uncomfortable being so close to the money as the 10 point spread x # of contracts is quite a big chunk of change as a possible max loss considering the probability that the position could end up in the money by expiration.

So, how are you protecting your positions? buying ER2 when it starts to move? I'm a little curious myself so may try a bit of CTM plays but at 1 contract only to test the waters.
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Quote from polpolik:

Yip,

i'm still a little uncomfortable being so close to the money as the 10 point spread x # of contracts is quite a big chunk of change as a possible max loss considering the probability that the position could end up in the money by expiration.

So, how are you protecting your positions? buying ER2 when it starts to move? I'm a little curious myself so may try a bit of CTM plays but at 1 contract only to test the waters.
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I think piccon has responded to your concern, and i just explain why I made the trade myself.

I don't have any CTM vertical. I have a combo with many long calls at different strikes and different expiration. In short, these CTM short calls are protected by many long calls (like a diagonal).

You cannot look at one trade to declare if it is risky or not. Look at market makers, they short a lot of ITM, ATM and CTM options, but these are hedged by other means (other long options, or the underlying). I manage the whole book using my own method. Perhaps Mark can give us insights on how market makers make money by managing their books.
 
Quote from yip1997:

To take advantage of the low IV today (rvx at 17 at trading time)
bto rut jun 900 call x 6 @3.7
sto rut dec 800 call x 2 @ 6.6
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I'll gladly take the other side of your spread.

Did you sell FEB (not dec) 800 call?

Mark
 
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