SPX Credit Spread Trader

Quote from RichardRimes:

Thanks again for sharing the trade...I do see the mouse ear :) hope you will let us know how it turns out.
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Sure, be glad to.

If you play with the ToS graphic risk analysis, you will notice that the mouse ear only produces the 'ear' profit on Expire day.

(I have not yet played with vega changes on a drop that severe (1 Sig +), so I don't yet have the trade completely mapped out). I just know that I'll exit the trade prior to expiry B/E.

The real characteristics of the trade from my perspective are:

1) The Ear portion of the trade reduced the potential max loss with a tradeoff of reducing the potential profit on the vertical spread.

2) The Ear seems to be the equivilent of a 'lottery ticket', meaning that in the event of expiring within the Ear range, then you get to turn in your lottery ticket for a credit greater than your initial credit.

This is a learning experience for me too.

BTW, OpVue 5 matched ToS Risk Analysis until today when I started fiddling with it. Since I'm evaluating OV5 and am in the early stages of a learning curve, tomorrow I'll have to figure how I screwed it up. But all in all, OV5 seems OK.

Later.
 
Richard, I agree wholeheartedly. TOS, in my opinion is by far the best brokerage for advanced options strategies. There platform for entering and reviewing trades is one of the best I have seen. Why anyone pays hundreds of dollars for platforms is beyond me. You have to play around with it for a while, but TOS does a good job with support and online help. They are the best around. OX can't hold a candle to TOS's service and platform.

I would also like to tell everyone that my SPX credit spread was once again successful this month. My short strikes for the February cycle were 1370-1470. I was tempted earlier in the week to take off the postion and I will next time. Why take the chance on making an additional $.20 when I already made $1. As I have stated before, I am following a newsletter. So far their newsletter has been right on and I particularly like the way that Andrew goes in great detail in his newsletter about each iron condor trade. It has been a wonderful learning tool and his white paper was very informative as well. If it wasn't for this message board I would not have come across his website so it goes to show that message boards can be helpful. Thanks everyone. Anyway, he has also finally decided to offer his iron condor for autotrade which I have yet to decide if I will participate. He has yet to finalize the price of the service so I will decide once he issues the service details. He is limiting the service to 75 spots (according to his blog) so I need to make a decision quickly I suppose. Has anyone else had any luck with other services that teach how to trade iron condors?

What are you guys trading this month? Does anyone have any other ideas on underlying indices that are good plays for iron condor spreads. Currently I am only trading SPX (and for good reason I suppose) but I would love to hear what others are trading. Again, thanks for all of the advice. This board has really helped my trading.
 
Quote from Zegras:


As I have stated before, I am following a newsletter. So far their newsletter has been right on and I particularly like the way that Andrew goes in great detail in his newsletter about each iron condor trade. It has been a wonderful learning tool and his white paper was very informative as well. If it wasn't for this message board I would not have come across his website so it goes to show that message boards can be helpful. Thanks everyone. Anyway, he has also finally decided to offer his iron condor for autotrade which I have yet to decide if I will participate. He has yet to finalize the price of the service so I will decide once he issues the service details. He is limiting the service to 75 spots (according to his blog) so I need to make a decision quickly I suppose. Has anyone else had any luck with other services that teach how to trade iron condors?
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I assumed that he would give you a free spot for the shilling you're doing.
 
I apologize if you thought I was spamming. I thought message boards were created to let people know about good opportunities. The reason I came to this board was because I traded Iron Condors and was hoping to get other ideas besides what I am currently trading which is the SPX. Would you consider all of the praise about TOS and OX on this board spam. I don't. I think it is someone's experience and they are letting people know good or bad there thoughts. Just thought I could help people out by letting them know about a service that, in my opinion, is very good.

On another topic, has anyone traded any of the strategies that are on www.collective2.com. There seems to be some big winners on there and I am curious if anyone has had the oppportunity to trade any of these. Thanks again!
 
I was curious if most of you carried your gains into next month or used condors as a source of income. Bascially, how are you paying yourself? Also, can anyone inform me of a good site or book that teaches money management. Thanks.
 
Quote from Zegras:

I was curious if most of you carried your gains into next month or used condors as a source of income. Bascially, how are you paying yourself? Also, can anyone inform me of a good site or book that teaches money management. Thanks.
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Speaking for myself this IS my regular/routine cash income. Proceeds all go into one huge trading account. I typically push my premium credits initially into a short term margin-able treasury product like SHY to get interest for the front month. As I earn the credit through expiration I sell a portion of SHY immediately after it goes ex-div each month to convert it into a federal funds brokers cash account. From there I make monthly distribution draw downs on the cash side of my account by electronic ACH money draws to my regular checking account as my domestic bills come in. Someday I'll get around to optimizing it for auto-bill pay. Any ways, it sure beats having to work the corporate 8 to 5 grind like I used to do up to 3 years ago. But with VIX down it IS work to set these IC positions up each month for the best average premium.

So far, apart from my regular longer term investments the iron condors are easily paying all my regular routine overhead/bills (e.g. medical insurance, various condo mortgages, maintenance fees, home/hurricane insurance, utilities, auto payment, real estate tax, charity etc.). I had one month in Oct/06 where I wiped out 3 months equivalent of cash income in the very month I got greedy and doubled the size of my normal position. That totally blew chunks but this very expensive lesson (something like a $65K loss) was good. It forced me to learn the concept of optimal position sizing and how to avoid a single event large loss draw down on my account. It also taught me a lot of respect to the upside power of a raging bull market and how quick one must exit to get out of the way when the bull stampedes. It had been so long since I had seen a bull trend that I had forgotten that bulls can briefly run just about as fast as bears can when they want to.

To answer your question about compounding. My residual profits (after paying the bills) eventually get sucked into an ever growing portfolio of highly diversified and ultra high quality equities. So I only indirectly compound a portion of proceeds through new equity purchases. So far, in this bull market this has proven to be a profoundly effective trading synergy. But admittedly, I have yet to test it to the down side since the bull has been running long and hard - since last summer. Consequently, I never permit myself to get anywhere close to overextended at the house or exchange margin limits. I simply am a coward about getting a massive margin call during a major market correction. Consequently, I never get full leverage out of my trading account either - at best 20% tied up covering the condor spreads. In fact, thanks to the considerable size of my equity base I almost never even have to tap into my margin (my SMA is huge). I might have paid $15 of margin interest in all of last year. And that was only because I forgot to sell some margin-able short term bond funds (SHY) to convert into cash before trading stopped for the weekend.

Cheers & Good Trading,
TS
 
Quote from TrendSailor:

I typically push my premium credits initially into a short term margin-able treasury product like SHY to get interest for the front month.

Cheers & Good Trading,
TS
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Have you ever considered any option trades on SHY?
 
Quote from Nanook:

Have you ever considered any option trades on SHY?
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No - the options are too thinly traded and that means that it would be very hard to get good fills and fair prices on either the long or the short side. There may be opportunity to those with the patience to become an expert on the supply/demand imbalance patterns but that's just not my game nor style.

TS
 
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