SPX Credit Spread Trader

arizonadreamer · Feb 25, 2007

Mark,

Care to share your May/Jun trade?

And as a former MM, do you have any answers to my previous questions about slow SPX execution and the hybrid system they use?

Thanks in advance.

AZD

dagnyt · Feb 25, 2007

Quote from arizonadreamer:

Mark,

Care to share your May/Jun trade?

And as a former MM, do you have any answers to my previous questions about slow SPX execution and the hybrid system they use?

Thanks in advance.

AZD

I am not familiar with the new bybrid trading system.

My executions with SPX are pitifully slow - 90 seconds on average, when I take a leg. I don't take legs anymore as I simply cannot wait that long to get a fill. IB tells me it's so slow because these trades are not electronic. They are apparently handled by a floor broker and it just takes time.

I don't like to share specifc trades because I don't see that it serves any purpose. And I see no need to boast about results. That's not the purpsoe of this board. But...

In RUT, I bot Jun, sold May:
Calls: 920/890; 900/870

Puts: 740/710; 750/720; 760/730; 770/740

Mark

MechTrade · Feb 25, 2007

Quote from dagnyt:

I don't like to share specifc trades because I don't see that it serves any purpose. And I see no need to boast about results. That's not the purpsoe of this board. But...

In RUT, I bot Jun, sold May:
Calls: 920/890; 900/870

Puts: 740/710; 750/720; 760/730; 770/740

Mark

I think we can all tell the difference between 'boasting' and 'sharing information'.

Clear examples of trades done are very helpful, particularly when the per contract debit /credit amount is revealed. Just leave out the trade Qty & Profit.

dagnyt · Feb 25, 2007

Question: This may seem silly, but:

When I report my trades from Section 1256 Contracts on Form 6781, I assume that I do NOT report those trades on Schedule D. Is that correct?

My broker (IB) gave me a completed schedue D, but it includes all trades, including those that should appear on form 6781. That's why I'm confused.

Amazingly, I did not trade these 1256 contracts prior to 2006.

Thanks

Mark

MechTrade · Feb 25, 2007

Quote from dagnyt:

Question: This may seem silly, but:

When I report my trades from Section 1256 Contracts on Form 6781, I assume that I do NOT report those trades on Schedule D. Is that correct?

My broker (IB) gave me a completed schedue D, but it includes all trades, including those that should appear on form 6781. That's why I'm confused.

Amazingly, I did not trade these 1256 contracts prior to 2006.

Thanks

Mark

As I recall from last year (haven't done this years return yet), Section 1256 trades are summarized (I forget where in the tax forms), elsewhere as opposed to appearing as individual line items on Sch D.

I use TaxCut software, and it guided me thru the proper reporting of my transactions at a cost of < $10.

RichardRimes · Feb 25, 2007

Quote from dagnyt:

Question: This may seem silly, but:

When I report my trades from Section 1256 Contracts on Form 6781, I assume that I do NOT report those trades on Schedule D. Is that correct?

My broker (IB) gave me a completed schedue D, but it includes all trades, including those that should appear on form 6781. That's why I'm confused.

Amazingly, I did not trade these 1256 contracts prior to 2006.

Thanks

Mark

The trades are NOT reported on Sc D only the numbers from the form 6781 (lines 8 and 9 carried to Sc D). The IRS does not receive anything from brokers pertaining to options...thus it is up to the individual to report them properly.

6781 is where YOU report the transaction to the IRS

edit...also general note to everyone while tax softwear is very nice you can also pick up a PUB 17 which answers almost ALL questions you may have regarding taxes in general. Pub 17 however itsn't great in the option category...but for 98% of all tax questions it has quick and easy to understand answers. FREE at your local library.

MechTrade · Feb 25, 2007

Quote from RichardRimes:

edit...also general note to everyone while tax softwear is very nice you can also pick up a PUB 17 which answers almost ALL questions you may have regarding taxes in general. Pub 17 however itsn't great in the option category...but for 98% of all tax questions it has quick and easy to understand answers. FREE at your local library.

Yeah... but tax software is soooo cheap and ezzzy, not to mention accurate.

And if you really want some great tax advice related to trading, look up Ted Tesser's published material... he can create a seriously complicated day for the IRS tax auditor!

TrendSailor · Feb 26, 2007

Traders - be on your toes this week. I expect to see a moderate to large volatility swing as we have a packed economic report schedule. This could be great for option volatility plays and a way for spreaders to leg into some higher premium.

Economic Calendar for the Week of February 26 â March 02
Date ET Economic Report For Estimate Actual Prior Impact
Tue. February 27 08:30 Durable Goods Orders Jan -2.0% 2.9% Moderate
Tue. February 27 10:00 Existing Home Sales Jan 6.24M 6.22M Moderate
Tue. February 27 10:00 Consumer Confidence Feb 109.5 110.3 Moderate
Wed. February 28 08:30 Gross Domestic Product (GDP) Q4 2.3% 3.5% Moderate
Wed. February 28 08:30 GDP Chain Deflator Q4 1.5% 1.5% Moderate
Wed. February 28 09:45 Chicago PMI Feb 50.0 48.8 HIGH
Wed. February 28 10:00 New Home Sales Jan 1090K 1120K Moderate
Wed. February 28 10:30 Crude Inventories 2/23 NA 3694K Moderate
Thu. March 01 08:30 Jobless Claims (Initial) 2/24 325K 332K Moderate
Thu. March 01 08:30 Personal Income Jan 0.3% 0.5% Moderate
Thu. March 01 08:30 Personal Spending Jan 0.4% 0.7% Moderate
Thu. March 01 08:30 Personal Consumption Expenditures and Core PCE YOY 2.3% 2.2% HIGH
Thu. March 01 08:30 Personal Consumption Expenditures and Core PCE Jan 0.2% 0.1% HIGH
Thu. March 01 10:00 ISM Index Feb 50.0 49.3 HIGH
Fri. March 02 10:00 Consumer Sentiment Index (UoM) Feb 94.0 93.3 Moderate

Cheers,
TS

RichardRimes · Feb 26, 2007

The problem with tax softwear (sorry OT) your ignorance about taxes can be a problem. Perfect example, some years back my sis took out money from 401K and knew that she had to pay taxes on it but chose the wrong form 1040A rather than 1040 and completely missed the line where the penalty was assessed. oops...penalty and interest a year or so later. Granted most tax programs do ask you the right questions to put you in the right place ....just be careful and complete in your answers.

MechTrade · Feb 26, 2007

Quote from RichardRimes:

The problem with tax softwear (sorry OT) your ignorance about taxes can be a problem. Perfect example, some years back my sis took out money from 401K and knew that she had to pay taxes on it but chose the wrong form 1040A rather than 1040 and completely missed the line where the penalty was assessed. oops...penalty and interest a year or so later. Granted most tax programs do ask you the right questions to put you in the right place ....just be careful and complete in your answers.

Finally dawned on me what you were saying...

Ignorance about taxes is not a problem for me, and I would think that most folks who trade combos of stocks, options and futures would figure out quickly what the different reporting req's are related to the different instruments (but maybe not since an experienced trader brought up this topic to begin with).

But I suspect that the use of tax software (or not) has nothing to do with understanding the tax codes.

My point is that the use of a $10 tax package will generally guide the user in the right direction regarding how to report correctly the various trading instrument results.

BTW, thanks for the TLT CC guidance. I'm surprised at the flexability associated with playing the TLT options with both CC and naked Putting to quickly balance price fluctuations in favor of your account.