SPX Credit Spread Trader

Zegras... I don't think anyone would complain if you talked about FREE resources. This is an open and FREE forum where we share ideas or different ways to do credit spreads on large indicies. In ET there are forums for money management and plenty of other topics. Congrads on your success but it does seem a bit like hype when you add resources that are NOT FREE.

Nanook...I use TLT to siphon off a some of my gains (when I have them) and just do a CC ...no bid deal . As mentioned trying a profitable spreading strategies on bond funds is very difficult due to lack of liquidity on the options.
 
Quote from RichardRimes:

Nanook...I use TLT to siphon off a some of my gains (when I have them) and just do a CC ...no bid deal . As mentioned trying a profitable spreading strategies on bond funds is very difficult due to lack of liquidity on the options.
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Curious. IB pays 4.79 and 5.05% money mkt rates (depending upon your acct size. Are you guys not getting decent mm rates with your brokers?
 
Quote from MechTrade:

Curious. IB pays 4.79 and 5.05% money mkt rates (depending upon your acct size. Are you guys not getting decent mm rates with your brokers?
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I use a 3-tiered cash system . It has the advantage of yielding me the max average interest I can from my short term cash while also providing high liquidity for electronic transfer in and out of the account. As well it pumps up my margin rather nicely as I will show in a moment.

My lowest tier is held in the broker's (Fidelity) "core" cash account. This pays a slightly lower interest rate (3.18%) but its very liquid since its in federal funds form. Cash in core can be wired or ACH xferd into banks or institutions in an instant. The core cash account is also where sales and credits settle to offset any margin debits and realize any credits etc. Naturally that liquidity and speed of cash turnover costs the broker more to manage. It also is not margin-able so to speak since its "cash". Since this core cash has such a high velocity and turnover the broker rightfully reduces the interest he pays to hold it here. I only keep cash I intend to use very short term cash in 1 to 5 days in this form and usually never more than about $3K-5K at any moment - unless I have a huge trade coming up.

My 2nd tier I use for money I plan to use in 1-4 weeks. This is where I buy SHY (ISHARES LEHMAN 1-3YR) since its ultra safe short term US treasuries that currently pays around 4.5%. The very nice thing about this product (apart from its safety and stability) is that it pays a dividend each month and is instantly available at the purchase to contribute to my margin-able securities account worth. I use this to float myself cash when I need it and typically sell it on ex-dividend day and use the credits to settle another trade.

My third tier cash are assets I hold in a margin-able money market account (Fidelity's Cash Reserves - symbol FDRXX). This higher interest rate cash (currently paying a handsome 4.93% yield) is where I park cash that I plan to use in the mid (30 days) to long term time frame (3-9 months). Since this kind of managed cash is a true mutual fund, by SEC rules new money moved in takes 30 days to mature to be eligible to contribute to margin. Consequently I have to manage the flow into and out of the two cash systems but it still only takes 1 day to settle when I do need it. But since it takes 30 days for new money to become eligible for margin I try to limit going in and out of this too often (why I use SHY). When my core cash account gets too large I push it here. All new money pools here independent of cash already margin-able and automatically matures to increase the margin credit every 30 days.

It took me a while to develop my cash management system - but I think I do this pretty darn good now and am happy with the net yield and flexibility I now have.

TS
 
Wow! Never thought I would be accused of spamming on a message board for recommending a site I have found useful. I thought this was the place to find out these types of things. I heard of the service (not going to mention again) on this site and thought I would make it known that the advice I received was helpful.

Anyway thanks trend sailor for the detailed response. I ahve learned quite a bit from your posts. What are you trading this month. I am looking at the 1495-1395 ranbge with 10 points on each side. I think I can get around 1.20-1.40 for the condor. I will let you now how it goes.
 
Quote from MechTrade:

Curious. IB pays 4.79 and 5.05% money mkt rates (depending upon your acct size. Are you guys not getting decent mm rates with your brokers?
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I do get something close to that with TOS but TLT with the CC is a bit better and I like having a bit of bond exposure. (not 007 :p)
 
Quote from Zegras:

Anyway thanks trend sailor for the detailed response. I ahve learned quite a bit from your posts. What are you trading this month. I am looking at the 1495-1395 ranbge with 10 points on each side. I think I can get around 1.20-1.40 for the condor. I will let you now how it goes.
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Sure - no problem.

I generally don't preannouce what I plan to do until after the deed is done hehe. I don't want to accidentally get someone else thinking about the same or similar position and then feel terrible about it if someone loses money etc.

I have been watching for some up and down chop for a chance to set up my March positions but unfortunately did not get in last week as I intended/hoped. Now VIX is all low again and I am going to have to go "surfing" again to get in on new chop. With VIX being so low & earning season tapering off I think I might play the upside a bit closer than I normally do. Also SPX 1500 should be a natural resistance point. We will see. But I think I'll lay in shorts to the upside somewhere in the 1500-1515 range if I can get any descent premium. To the downside I only see real technical support at around 1330. But that is way out in hyper space and won't fetch much premium unless I can ride an undertow part way there to opportunistically get in. If we can't get some down volatility I'll likely step in to March in baby steps - maybe look at the 1395 area to set my down side shorts. It will depend on trading volume and premium levels.

I will then probably put on another directional spread close in on RUT March in the 3rd week for (hopefully) an in and out "quickie". I'll just have to watch how it develops.

Overall I think we are still moderately bullish from here with new money/liquidity coming in from abroad as well as deadlines for 2006 IRA money as well as new 2007 money - not to mention large institution portfolio reshuffling. It looks like the market also gets more selective from here and that may tend to flatten out the largest in-dices like SPX. It should be another interesting month.

TS
 
Quote from RichardRimes:

I do get something close to that with TOS but TLT with the CC is a bit better and I like having a bit of bond exposure. (not 007 :p)
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TOS pays 1.5%- I would not consider that close to IB @ 5%, although it looks like IB only pays interest if you have a $10k or greater cash balance.
 
TOS will and does pay more than 1.5% - if you ask. All things are negotiable based on the amount of cash you park there... just call them and ask for a better rate.
 
Quote from dqtmg2:

TOS pays 1.5%- I would not consider that close to IB @ 5%, although it looks like IB only pays interest if you have a $10k or greater cash balance.
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Thats incorrect Mark..If you request TOS pays something over T-bills..which works out to close to 4%. You may need to have a certain $ amount (like IB requires) but I know this to be a FACT as I have an account with TOS and I don't believe you do.
 
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