SPX Credit Spread Trader

[domestic]

Quote from yip1997:

[edit] Mark, are you interested in looking at Domestic's long short-term, short long-termx2 strategy with RUT?

yip, you have learned an awful lot in a short amount of time. i just would like to clarify again some of what i do. i do have more front month longs, shorts @ 45 days or so, debit spreads, and straight longs. i net credits overall, but this strategy can change of course.
i am a lover of wotm credits, naked or spreads. this year i am hedged, maybe not perfectly, but still hedged. i do like doing the debit spreads above and below (for calls) my shorts, they have paid well recently.

the margin advantage with future options is very clear to me. i have done very well when others have blown up.

even though mav can be quite abrasive and arrogant, his jbo advantage looks better and better. my only worry is about my funds safety. good luck.

 

[yip1997]

Quote from domestic:

yip, you have learned an awful lot in a short amount of time.

Credit has to be given to those including you, Mark, Coach, Sailing, piccon, Cache, Rally and many others (even TS!) who are willing to explain their strategies and demonstrate the strategies with examples. I really appreciate it.

I deserve part of the credit as I am not afraid to show my ignorance and ask stupid questions.

 

[yip1997]

Quote from domestic:

i am a lover of wotm credits, naked or spreads.
the margin advantage with future options is very clear to me. i have done very well when others have blown up.

IMHO risk-based portfolio provides a higher leverage for wotm credit spreads when compared to CTM.

These are my findings for risk-based portfolio:
1. Lower margin for fotm vertical when compared with ctm.
2. More long (even wotm) can provide higher leveraging power.

When spot moves close to your strikes, pm will converge to the real risk. It is better to close it when the spot is still far away from your strikes to avoid exponential growth in your margin especially when you are highly leveraged.

If we are highly leveraged under the new margin rule, NEVER NEVER NEVER wait till it is 15 or 20 points from your strikes. We fotm spreaders all need to change our adjustment rules.

Leveraging changes the rules of the game. That is why most people consider naked put is more risky than covered call (though they are the same synthetically).

 

[huh]

Hosed by IB, anybody else have problems with "busted trades"? I was short an SPX 1440 April call yesterday. Went in today and put in an order to cover at $7.50 using their Webtrader, check my order and it's been executed and it clearly shows it was executed for that price at 10:02 AM.

Market goes up so I decide to re-short SPX 1440 April for $7.90 and the order fills. I check my executions screen and both trades show as being filled....but lo and behold now I'm short 2 April SPX 1440 contracts in my account positions screen yet the execution screen shows a buy and a sell.

Then I get an e-mail from IB saying my first buy order at $7.50 was cancelled because it was "erroneous"....Now my ratio spread has become two vertical spreads at 1440 with the market bouncing off and holding short term support......of course IB won't do anything so now I've got to eat the loss or sweat it out and hope for a down day.....argh!!

Anybody else ever run into these situations with their brokers? This is the first time I've had this issue and I"m pretty disgusted with IB........it's probably not their fault but I gotta take it out on someone!

 

[RichardRimes]

WHY is it NOT their fault? If the trade went thru and then THEY said THEY made an error I'm at a loss as to why YOU should eat the loss....

 

[dagnyt]

Quote from RichardRimes:

WHY is it NOT their fault? If the trade went thru and then THEY said THEY made an error I'm at a loss as to why YOU should eat the loss....

IB is NOT saying they made an error. They are saying the CBOE erroneously reported that the order was filled, when it had not been filled.

Mark

 

[yip1997]

Quote from domestic:

even though mav can be quite abrasive and arrogant, his jbo advantage looks better and better. my only worry is about my funds safety. good luck.

Domestic,

Why do you think jbo advantage looks better now? Though I think there are still some advantages with jbo, jbo doesn't look as attractive as in the past with the introduction of pm.

 

[RichardRimes]

Quote from dagnyt:

IB is NOT saying they made an error. They are saying the CBOE erroneously reported that the order was filled, when it had not been filled.

Mark

Thats pretty lame to me.....I would think IB would step up and cover their client

 

[domestic]

Quote from yip1997:

Domestic,

Why do you think jbo advantage looks better now? Though I think there are still some advantages with jbo, jbo doesn't look as attractive as in the past with the introduction of pm.

if you reread some comments from you know who in the thread bye bye reg t explaining point by point the advantages; they are significant. essentially the fact that margin does change(in jbo haircut) in a negative move on your account is what i call a "killer app". i cannot resist using an analogy that i am familiar with. in my business, one advantage can make the difference between making money and not making money. i own my building and have no debt; compared to my competitor down the road who rents and has leases on machines, i make more dollar to dollar if our prices are the same. this advantage cannot be under emphasized. additionally, i will survive when things slow down (as they are now) and my competition gets his balls handed to him. to me trading is the same as a traditional business; those with more edge not only survive, but prosper.

the pma account under certain circumstances will converge to reg t (as read in ib's doc's). if this does not happen in a jbo haircut situation; well then there is no question who will survive in that inevitable negative move that always comes. think about what can happen if your account dips below 100k and those computers wipe you out. it happens fast as you all should know.

also, as i am no big fan of mav; i must admit that he brings an awful lot here in irreplaceable knowledge but still has a financial agenda that cannot be overlooked. his explanation of a jbo haircut is very clear to me. it has the killer app.

i would love to hear from anyone who is in a jbo (other than mav) regarding their real world experiences. anyone out there who can articulate a few good points?

 

[dagnyt]

Quote from RichardRimes:

Thats pretty lame to me.....I would think IB would step up and cover their client

IMHO, our poster should have requested that IB bust his sale, because that sale was based on the erroneous fill. It's not IB's fault that the customer did not do that.

But if IB had requested that the trade be busted (per the customr's request) and if the exchange refused to bust it, that would have been the time for IB to step in, take the trade in its error account, and make its customer whole again.

I'm not tryng to argue with you. Just don't think the broker should do anything if the customers chooses not to do anything.

Mark