SPX Credit Spread Trader

Trading Journal

Okay on the TOS website to put on the short straddle credit spread. Think I have it figured out. Won't know until I try it?
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On the SHORT STRANGLE, as far as I can figure it, is the same as the SHORT STRADDLE, except the short straddle is ATM options in the legs and the SHORT STRANGLE is out the money options on the two legs. But otherwise they work the same on collection of time decay, or theta and also on reduction in premium due to loss of volatility.

The LONG STRANGLE however seems to be were you buy the initial spread and you are hoping for a 12 point or better trend in the OEX in whatever time frame, so that the out-the-money expires and the in the money earns so much profit as to cover the loss of the out the money and then some more besides? Sort of like trading a straight CALL or PUT, though I cannot really see any advantage to the Long Strangle that could not be played better by the straight long CALL or PUT if you had the direction right? On the other hand if you are looking for a strong move, but didn't know which way, it would be a possible?

Do I have it right TRADING JOURNAL?
 
Falconview: You seem to be getting the straddle meaning right. Straddles/strangles are not about direction, they are about the SIZE of the MOVE. It is a way to bet on the size of the move: If you think the size of the move is huge then you buy them; If you think the size of the move is tiny to no move, you sell them. Huge and tiny are with respect to the premium priced in the straddle/strangle.
 
Quote from falconview:


TRADING JOURNAL is quite right in that one needs a BASKET of TRADING tricks to make a good account grow. I certainly agree with that.
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In case this is a new conclusion that you added to your knowledge, you may want to mention it explicitly so that we have an idea of your progress.
 
Quote from Stanford:

Tradingjournals, I will open a practice account this week. I don't think I will share the full extent of my knowledge with the brokers. I read somewhere earlier of the type of trading experience and numbers the brokers want to see before allowing the level needed dfor the spreads, and lo and behold, that is just where I am!
Fortunately the over 100K net worth is ok until I pay my tuition!
Do you think it is possible to get away without paying a huge amount!
Thanks michael
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Good Michael. Do not hesitate to ask questions. As for the tuition, we wish for you to be among those who will not pay or pay a little temporarily tuition. Do not hesitate to ask questions. There are two core assets in trading: knowledge + capital. You need both. Do not lose your capital. Remember that rule. I wish I knew otherwise when I started. While experience cannot be bought, others can reduce its time and help avoid the traps and unnecessary falls that may cause pain. There are ways to reduce all the negatives. We can talk about it.


Warmest regards!
 
This Monday morning is the monthly expiration week. You use the regular monthly option chain for this. As there are no special weekly prices on the coincidence of the end of the monthly expiration. All the same thing now.

There is a lot of signaled pressure for an up move. But the signals are also giving a drop. So the result looks mixed with a sideways track?
I checked the Implied Volatility on the 490 and the 485 but practically no difference worth talking about. So nobody is guessing at this point. Just seeming to wait for somebody else to start a move and a trend.

Wait and see!

As tp Micheal, Trading Journal has it right. NEVER take a trade you think might lose. Of course that said, there are actually trading systems that trade deliberately to lose, waiting for a breakout into a trend. Big drawdowns in those systems which would wipe out an undercapitalized trader.
OVERTRADING is the bane of the trader. GREED and wanting more, so trading more marginable and questionable trades. Sometimes you win and sometimes you lose. But a LOSS is infinitely more difficult and expensive to recover than doing only winning opportunities. Because you compound your losses with the costs lost in market maker spread and commissions you also lose. It is not just the index price you lose on.

Ideally you NEVER want a LOSS! You should trade that way. You get rich faster. Even when it is fewer trades.
 
Sir Galahad wishes to inform King Arthur of Belize that buyers of straddles/strangles may take leads at beginning of battles (it is what should be expected almost all the time), and that a secret to victory of his Majesty's army may mainly reside in first waiting for the enemy to bleed. The holy grail to the victories of his Majesty's army might actually be to never fight/time/etc, but rather to wait for enemies to surrender after they defeat themselves by fighting time. Keep a distance from the enemy, and never start a fight if the enemy can get close to you. Cowards can win battles in markets.
 
Trading Journal

I had to read it twice to get your blurb on battles. The key word was BUYERS were to do the bleeding, which I missed the first time around. Ha! Ha!

Why not the weekly bottom? Well I am not selling the weekly bottom anymore, only the TOP because of the risk, or probability factor. ( Vertical Credit Spreads ) The top has a loss probability of 7% whereas the bottom has a loss probability of 40%.
There are probably clear cut situations in which I can trade the weekly bottom with better odds than 40% for a loss. Such as a long slow dull climbing BULL TREND. We certainly are not in that right now though. At odds of 60% to 40% I will pass.
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I'm using scratch paper to keep track of the Implied volatility of the changing index, on a specific strike. Also for short Straddle and for the short strangle. Just to see what happens and compare!
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Had to go out on other business. So just got back in and ran BIG CHARTS to see how the day ended?

Looks like a very weak up day tomorrow? Wonder how that compares to your models, Sir Galahad?
 
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