SPX Credit Spread Trader

Quite active today. Closed the other SPX put spread for JUNE I had opened to lock in more profit and open more margin. The original position is in the quote below.

I closed it for a net debit of $0.15 for a net credit profit of $1,350 and a return on margin of 1.5%.

Now will be agressively looking for JULY positions and some JUNE scalps.

Phil


Quote from optioncoach:



90 JUNE 1110/1120 Bull Put Spreads @ $0.30

Credit = $2700
Margin = $90,000
ROM = 3%
More...
 
Hi OptionCoach,

How are commissions figured into your p/l?

Thanks in advance.

Continued good trades to you,

Lar
 
Thanks for the question.

I am leaving out commissions here because we all use different brokers so our transactions cost will differ with each person. I use OX and get the active trader discount which comes out to about $1 to $1.25 per contract. Naturally this lowers any return on margin but not a significant amount given the % returns I am looking for month to month.

However I only recommend doing such large scale strategies with discount brokers like IB or OX or TOS who can charge $1 to $2 an option with no additional fees.

Phil
 
Phil, something to consider is to look at the indexes that the ISE is supporting. They have several, but Im most familar with the SML, MID and MSH.

On my spread orders in these products, if I give up a nickle I can sometimes get an instaneous fill. For example, today I rolled out of an SML calendar spread into the the next month. The mid price of all the legs was 1.80, I offered at 1.75 and was hit that second.

I think their market making program is so automated in some of these indexes that it just takes any small edge it can get. Its not bad at all.

Best,

Mike
 
Added some more positions for July, this time on the call side. I was able to split a b/a down the middle for a nice OTM bear call spread.

My new position is:

Sold 95 JULY 1260/1270 Call Spreads @ $0.45

Credit = $4,275
Margin = $95,000
ROM = 4.5%.

1260 July Call has delta of .07 so a 93% probability of profit.

Remember that I also have the current JULY Put spread position:


Sold 60 JULY SPX 1110/1125 Put Spreads @ $.80

Net Credit = $4,800
Margin = $90,000
ROM = 5.33%


Now the total margin for this JULY Iron Condor is usualy the largest side of the trade which is $95,000. With a total credit of $9,075, the RETURN ON MARGIN FOR JULY IS:

9.56%!

June coming to an end soon but I still have my JUNE call spread open and will update. Place an order for a higher strike JUNE put spread to scalp more premium but no fill yet.

Regards,

Phil
 
More JUNE scalping on a down dip day.

Sold 65 JUN 1145/1160 Put Spreads @ $0.65

Credit = $4,225
Margin = $97,500
ROM = 4.33%

This is a little riskier than normal being only 37 points OT with two weeks to expiration. But given the current trend I do not see the SPX hitting 1160 in two weeks. Also time decay will be at its greatest so any upward pops will really eat into the premium.

This is the additional component of trading these spreads, scalping in the last week or two for some more premium.

Regards,

Phil
 
Coach,

Can you elaborate on what strategy(s) you use to place a net credit order with your broker to split the spreads on the SPX?

From a recent post - 05-18-05
On my $0.75 spread fill, the bid ask for the spread was about $0.45/$1.40 and I had to shave off the mid-point to actually get the fill.

Do you use the CBOE website for quotes?

Thanks again,
Steve
 
I use OptionsXpress and their quotes. They allow me to open an option chain on SPX only looking at put spreads which shows the bid/ask spread for the put spreads at different distances (i.e., 10, 15 points apart).

I place an order to sell the spread at the mid-point and let it sit there for some time. If it does not hit then I shave a nickle or dime to the bid side and let it sit. It requires some patience but eventually you will get a fill somewhere between the actual bid and the mid-point.

Phil


Quote from nlslax:

Coach,

Can you elaborate on what strategy(s) you use to place a net credit order with your broker to split the spreads on the SPX?

From a recent post - 05-18-05
On my $0.75 spread fill, the bid ask for the spread was about $0.45/$1.40 and I had to shave off the mid-point to actually get the fill.

Do you use the CBOE website for quotes?

Thanks again,
Steve
More...
 
Hello Coach,
Let me make sure I'm understanding this. I went to the OX quotes and pulled up (as an example) a 15 pt spread for the July 1125/1140 Puts.
Keeping in mind that the quotes are from Saturday morning.

1125/1140 Put B - 0.70, A - 1.90

Would you have placed your initial (optimistic) order to sell at a credit of 1.30 based on these quotes? If not, then could you please let me know what you would have done to get the order placed.

Thank you.
 
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