You never put on a backspread for a credit? U serious?
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
You never put on a backspread for a credit? U serious?
>adjustment
In one of his webinars, Dan taught me something about horizontal spreads: after yield goes to 20-30%, tighten the stopout to fifty percent (ie, I realize at least a ten percent yield). Then use a trailing stop as realized yield increases. He calls it "tightening the noose".
If the position goes out before you get the twenty percent, just get out and put on a new position.
This has become a fundamental part of my trading plan.
In one of his webinars, Dan taught me something about horizontal spreads: after yield goes to 20-30%, tighten the stopout to fifty percent (ie, I realize at least a ten percent yield). Then use a trailing stop as realized yield increases. He calls it "tightening the noose".
If the position goes out before you get the twenty percent, just get out and put on a new position.
This has become a fundamental part of my trading plan.
How is it margin intensive? It's the difference between the strikes minus the credit. It's a fraction of the margin required for most of the people on this thread trading iron condors!!!! LOL.
Sure. Sell one March ATM call for 1.50 and buy two March OTM calls for .20, for a 1.10 credit.
Any stock. Here, I'll take WSM.
34.76
Sell one March 35 call for 1.05
Buy two March 37.5 calls for .25
Net credit .55
Real prices.
Mav,
Thanks for the example. Credit or debit makes no real difference in option pricing. This one seems too directional in nature. The only good part is +ve gamma. It doesn't look good to traders like me who get used to time decay but I'll put the effort to understand why you think otherwise.