SPX Credit Spread Trader

Decided to take more profit today and say goodbye to July positions and close my last July Put Spread.

Originally 55 July 1150/1165 Put Spreads @ $0.50

Closed for net credit of $0.35
Credit = $1,925
Margin = $82,500
Return = 2.33%

Now my positions are:

115 SPX AUG 1260/1275 Call Sprds @ $0.60

115 SPX AUG 1125/1140 Put Sprds @ $1.40

Phil
 
Hi Phil, thanks for the reply, really appreciate it. Great of you to post your trades as they happen cause this is sort of what Im doing at this point of my trading. There is a perception by most that what we're doing is rather risky and Ive always questioned myself if I was doing something crazy. Its good to know there are seasoned pros doing this and closely related versions, so it makes me feel more secure.

My current strategy is writing naked puts and not credit spreads; but I only write one, two or rarely three contracts on quality Australian (ie the banks) stocks that Im happy to own and can afford to buy if exercised. Each contract on the Aust exchange consists of 1000 shares. Also I don't write these puts blindly but only after theres been sufficient downward moves. So far Ive not been exercised since starting in September last year after having done around 11 transactions :D Sometimes I just buy the shares or buy some calls instead of going for put premium after each fall if I think I can make more money from upwards movement. As you can see, my volume is small. Anyway Ill keep reading this post with interest and feel the security of others holding my hand as I go along my treachearous journey.

Keep up the good work.

Cheers
Ivan
 
Coach,

I have one NDX 1540 / 1550 credit call spread
left over from an iron condor I opened last week.

When I opened it I received about a $1

NDX as you know closed way up at 1533 friday
and the spread is now almost $4
My maximum loss is $1000 less the $100 I took in.

What would you suggest I do on monday?:

1. Buy 5 qqqq 38 calls for .2 (risk $100 for maybe $500 profit)
OR
2. Buy 1 NDX 1560 call for 2.5 (risk $250 for maybe $500 profit)
OR
3. Close out spread for a $300 loss
OR
4. Do nothing and pray that NDX closes below 1540 next fri.

Thanks for your help.
 
Sorry if this question is a beginner level. I'm just curious what happens if you get assigned on the SPX options. Lets say if you sell equity put option you just get long stock, what is the case with SPX, what do you actually get if you are short spx put and get assigned.

Thanks, great thread, I will go out and get your book today!
 
Quote from Predictor:

Sorry if this question is a beginner level. I'm just curious what happens if you get assigned on the SPX options. Lets say if you sell equity put option you just get long stock, what is the case with SPX, what do you actually get if you are short spx put and get assigned.

Thanks, great thread, I will go out and get your book today!
More...

cash settlement. You arent assigned the index or anything such as that.
 
First let me say that praying for a stock or index to move your way is NEVER the right choice. I am not familiar with the NDX so I can give you some general ideas. One idea is to roll the position to higher strikes. You buy back the current spread and sell another spread just above it to give you some room with only 4 days to expiration. The net credit from the new position will reduce the loss taken on the previous position and when combined with the put profit on the put side of your IC, there should still be some profit.

The other approach is to combinethe current loss with the put side profit for a small net loss and perhaps use wider strikes for the next condor. Nothing wrong with taking a small loss in any month to prevent a big loss so you can keep taking in premium. Risk management is the key to this strategy and blindly praying just will not work lol. So two options are to close the entire thing and do a lessoned learnerd review and analyze the width of the strikes or roll higher for a loss reduction and possible net profit.

AS far as buying QQQQ calls and the like, it is not a bad idea but I am not sure how the qqqq match the NDX so it could provide a partial hedge but ma result in overtrading a position. I add my SPY positions as hedges well before it becomes really necessary to do so. Trying to add the hedge this late might not be as effective but I will not rule it out. I wish I could give you a more definitive answer on adding the QQQQs or NDX but I am not familiar with your entire position and would not want to steer you in the wrong direction.

Before the market opens on Monday, check the futures to get an indication of which way the market is expected to open. If the futures point flat to lower, which is what I expect, then you can take a little more time to analyze. Positive signs mean you need to develo your plan before the opening and calmly and cooly implement it.

Taking one loss out of 12 trading months is not bad and limiting it will ensure that the other 11 lead to significant returns.

Phil

Quote from esu2:

nlslax..

I think NDX was around 1490 last week when i
started the iron condor.


optioncoach..
awaiting your reply!
More...
 
Phil,

First, let me say that I really appreciate
what I have learned from you and others in
this very informative thread.

I was just kidding about prayer as I would
never bring God into my trading.

I already closed my put spread of the condor
for a small gain.. maybe .30

Tommorrow morning.. if NDX shows upside,
I will immediately close the position for $4 loss
and open a 1560 / 1575 call spread for a $2 credit.
I just fear that this strategy could be a form of
"dollar cost averaging" as I am further betting
against the bull trend.

Taking 1 loss out 12 trading months sounds
great.. Too bad this is my 1st month!
I must have very bad luck!

Take care,
esu2
 
You must log in or register to reply here.
Back
Top