SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Mark and other Experts,
When GOOG was @580, I entered the following Bull Spreads:
BTO 5 GOOG Oct 580 Calls
STO 5 GOOG Oct 600 Calls
Debit 7.40 Cost $3,700
Today GOOG was closed @616
Before closing, I did the following:
BTC 5 GOOG Oct 600 Calls
Debit 26.00 Cost $13,000
I left long calls open
Oct 580 Calls closed @ 40.60
GOOG will report earning after Thursday closing. It will easily go up or down 30 point on Friday opening. If I donât want to take the risk, I have to close the long call before Thursday closing.
If I want to hold the calls as I expect the earning will be good, what should I need to do to protect myself? I am thinking: buy put; enter bear put spreads ; sell OTM call to buy OTM put. Which strategy I should use?
Any helps and advices would be greatly appreciated.
When GOOG was @580, I entered the following Bull Spreads:
BTO 5 GOOG Oct 580 Calls
STO 5 GOOG Oct 600 Calls
Debit 7.40 Cost $3,700
Today GOOG was closed @616
Before closing, I did the following:
BTC 5 GOOG Oct 600 Calls
Debit 26.00 Cost $13,000
I left long calls open
Oct 580 Calls closed @ 40.60
GOOG will report earning after Thursday closing. It will easily go up or down 30 point on Friday opening. If I donât want to take the risk, I have to close the long call before Thursday closing.
If I want to hold the calls as I expect the earning will be good, what should I need to do to protect myself? I am thinking: buy put; enter bear put spreads ; sell OTM call to buy OTM put. Which strategy I should use?
Any helps and advices would be greatly appreciated.
no expert but I do know how to take a gain
You have done VERY well on this trade including buying your short. With GOOG up this morning...SELL your long call today or tomorrow early am and congratulate yourself on a terrific trade...TAKE PROFITS..THEN if you want to open a March/Dec trade do it.
Wow. That's far too risky for me.
Have you considered selling your expensive calls and buying some less expensive calls? That locks in your profit and still gives you a bullish play.
Or you could sell out your long calls and sell a put spread, collecting a cash credit. Of course, that limits your profit potential.
I'm sorry, but I really have no good advice to offer here. You clearly want to try to make a killing - and although that may work for you, it scares the hell out of me.
Good luck,
Mark
I sold 5 GOOG Oct 580 Calls @ 60.10 when GOOG was @639 this afternoon. I have a nice profit for this spread. This was my first time to leave one leg open and closed the other side when doing spread. I remember when I try to do something, I am always lucky for the first time. Buying stocks, selling covered calls or naked puts, I always make money for the first time. Even first time I played blackjack in the Casino, I won some money. But I know the luck will not always follow me.
Going forward, I should be very careful. I should know if the earning reports for IBM/INTC/YHOO after Tuesday closing were bad, and the Wednesday morning inflation report also was bad, my deep in-the-money calls would become less value quickly. Although I put stop limit price at $36.00 for the calls, it would not prevent my big loss if the market melts down on Wednesday or on Thursday.
Anything can happen in the market. In August, I closed my put credit spread on SPX at loss, and kept deep in the money put debit spread 1430/1460 open one day before Aug options expiration. SPX was closed @1400 on Thursday. No one would expect SPX SET would spike up to 1445 as Fed announced rate cut.
Thanks to Mark and others for your help and good advice. I sincerely wish we can continue to use this thread that set up by Optioncoach to discuss Spreads and other options strategies
Going forward, I should be very careful. I should know if the earning reports for IBM/INTC/YHOO after Tuesday closing were bad, and the Wednesday morning inflation report also was bad, my deep in-the-money calls would become less value quickly. Although I put stop limit price at $36.00 for the calls, it would not prevent my big loss if the market melts down on Wednesday or on Thursday.
Anything can happen in the market. In August, I closed my put credit spread on SPX at loss, and kept deep in the money put debit spread 1430/1460 open one day before Aug options expiration. SPX was closed @1400 on Thursday. No one would expect SPX SET would spike up to 1445 as Fed announced rate cut.
Thanks to Mark and others for your help and good advice. I sincerely wish we can continue to use this thread that set up by Optioncoach to discuss Spreads and other options strategies
At what point do you roll out or close out? I have SPY credit spread NOV 145/140 Puts. The reason I took the trade was my belief that 1490 SPX would hold. However, with today's debacle, I am only another drop away from going ITM on my short at 1450. I have a stop to buy back short at 1469 currently. Would you let it ride upon the open to see what happens, close out immediately and roll to 1400 as short strike? Or another suggestion?
Thanks
Thanks
Cortez,
You should follow your plan.
For example, I write further OTM puts (currently the 1375 ES) and buy back when they get within the lesser of $75 or $10 x number trading days left.
The key is to have your plan in advance and follow it without emotion.
You should follow your plan.
For example, I write further OTM puts (currently the 1375 ES) and buy back when they get within the lesser of $75 or $10 x number trading days left.
The key is to have your plan in advance and follow it without emotion.