SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Thanks! Enjoy and while reading if you have any questions or comments, good or bad, please feel free to contact me!
Under the BOOKS section here at Elite Trader the book is posted under the Options section and I posted a message about the book.
Market has shown some legs... here is hoping for a pullback!
Phil
Under the BOOKS section here at Elite Trader the book is posted under the Options section and I posted a message about the book.
Market has shown some legs... here is hoping for a pullback!
Phil
Well July is closed and it certainly has been a great month. I am posting my spreadsheet which shows all the trades closed in JULY from OptionsXpress.
I formatted the spreadsheet better and group the spreads to show the profit, days in the spread, margin and return on margin. Remember that the margin column is not cumulative since the positions overlapped. Also, teh profit and returns are AFTER commissions for a more realistic value.
July was somewhat quiet although we had a more bullish bias. August may be the last month we can do an Iron Condor and I will most likely move more towards OTM put spreads.
The link to the Excel sheet is below and thanks to all for their various input along the way!
Phil
I formatted the spreadsheet better and group the spreads to show the profit, days in the spread, margin and return on margin. Remember that the margin column is not cumulative since the positions overlapped. Also, teh profit and returns are AFTER commissions for a more realistic value.
July was somewhat quiet although we had a more bullish bias. August may be the last month we can do an Iron Condor and I will most likely move more towards OTM put spreads.
The link to the Excel sheet is below and thanks to all for their various input along the way!
Phil
Andy:
The returns are not affected too greatly because if I can go far OTM I tend to increase the number of contracts to compensate for less credit than doing the ICs. However, I usually find myself adding call spreads at times after large rallies where I see technical resistance to catch premium on pullbacks mixed with time decay so I may leg into ICs once in a while.
What may happen since I am only in the put spreads is that I my average time in trades will go up since with ICs I can always play one side on a large up or down move. With straight put spreads, it is only a large up move that allows me to close and roll up. Large down moves do not allow to do much unless I already have opened a call spread.
So the frequency of trades may decrease but I still find ways of adding call spreads to leg into ICs when I find an opportunity. I try not to pigeon-hole myslef too strongly into avoiding ICs in the Fall since the market is always changing and presenting opportunities.
But I am not gonna lie that I tend to make more in the summer from the dead movement in those warm hot months. If I still use around $250,000 max in margin then my goal is still at least $10 - $15K in premium a month. That of course is less than what I took in JUNE and JULY but that is a result of less ICs.
As always my goal is collect money each month and avoid losses so traded less frequently will only make my broker unhappy
.
Phil
The returns are not affected too greatly because if I can go far OTM I tend to increase the number of contracts to compensate for less credit than doing the ICs. However, I usually find myself adding call spreads at times after large rallies where I see technical resistance to catch premium on pullbacks mixed with time decay so I may leg into ICs once in a while.
What may happen since I am only in the put spreads is that I my average time in trades will go up since with ICs I can always play one side on a large up or down move. With straight put spreads, it is only a large up move that allows me to close and roll up. Large down moves do not allow to do much unless I already have opened a call spread.
So the frequency of trades may decrease but I still find ways of adding call spreads to leg into ICs when I find an opportunity. I try not to pigeon-hole myslef too strongly into avoiding ICs in the Fall since the market is always changing and presenting opportunities.
But I am not gonna lie that I tend to make more in the summer from the dead movement in those warm hot months. If I still use around $250,000 max in margin then my goal is still at least $10 - $15K in premium a month. That of course is less than what I took in JUNE and JULY but that is a result of less ICs.
As always my goal is collect money each month and avoid losses so traded less frequently will only make my broker unhappy
.Phil
Phil,
Makes a lot of sense. I understand your approach during sideways and uptrending markets. What about downtrending conditions? These can be vicious and can bounce to the upside on a dime -- do you stick with call spreads (essentially the opposite strategy of what you plan to use in the fall)?
Thanks,
Andy
Makes a lot of sense. I understand your approach during sideways and uptrending markets. What about downtrending conditions? These can be vicious and can bounce to the upside on a dime -- do you stick with call spreads (essentially the opposite strategy of what you plan to use in the fall)?
Thanks,
Andy
Hi Phil,
Thanks for a great thread! Two quick questions for you.
1. At the beginning of the month, do you typically wait for a large move up or down in the SPX before entering a new position, or do you enter as soon as you can get the credit and distance OTM you desire?
2. Over the past two years, let's say, what percentage of trades have you had to adjust or hedge?
Thank you for taking the time to reply.
modegolf
Thanks for a great thread! Two quick questions for you.
1. At the beginning of the month, do you typically wait for a large move up or down in the SPX before entering a new position, or do you enter as soon as you can get the credit and distance OTM you desire?
2. Over the past two years, let's say, what percentage of trades have you had to adjust or hedge?
Thank you for taking the time to reply.
modegolf
Downtrending conditions make me quite gun shy with respect to the put spreads since markets often fall faster than they rise. If we have such a market I then try to play the opposite side using calls. That is why this strategy is not simply sell and wait until expiration. I have to follow the market and adjust my trading to it, not expect the market to adjust to my strikes.
For example, my assumption is that in Sept, I may move more towards the put strikes but if the market shows wekaness in Sept, I will have to adjust my thinking, and perhaps my open positons.
So I do try and indentify a trend if it exists and play the opposite side as best I can and play both side when there is no trend, or better said, the trend is sideways. Right now we ar ein a slightly upward trend but no real strength so I still have both calls and puts for Aug although the calls are about 21 points OTM so I am watching them quite closely.
Phil
For example, my assumption is that in Sept, I may move more towards the put strikes but if the market shows wekaness in Sept, I will have to adjust my thinking, and perhaps my open positons.
So I do try and indentify a trend if it exists and play the opposite side as best I can and play both side when there is no trend, or better said, the trend is sideways. Right now we ar ein a slightly upward trend but no real strength so I still have both calls and puts for Aug although the calls are about 21 points OTM so I am watching them quite closely.
Phil
Forgive the shameless plug but...
If you are going to be in the Washington, D.C. area and attending
the Money Show on August 11 - 13, 2005, I will be at the Trader's
Press Booth on Friday, August 12, 2005 from 4:00 PM to 4:30 PM
signing books, which can be bought there as well. For those not aware, my book is called "The Option Trader Handbook: Strategies and Trade Adustments"
If you are not interested in the book, still stop by to say hi, forgive the plug.
Here is information on the Money Show, which costs you nothing to attend and they have numerous speakers and free presentations:
www.dcmoneyshow.com/ms/dcms/main.asp
If you are in the D.C. area stop by and say hello or bring/buy a
book to be signed.
The information and location is on the website above!
Remember:
Friday August 12, 2005
4:00 - 4:30 PM
Trader's Press Booth
#714 - 719
If you are going to be in the Washington, D.C. area and attending
the Money Show on August 11 - 13, 2005, I will be at the Trader's
Press Booth on Friday, August 12, 2005 from 4:00 PM to 4:30 PM
signing books, which can be bought there as well. For those not aware, my book is called "The Option Trader Handbook: Strategies and Trade Adustments"
If you are not interested in the book, still stop by to say hi, forgive the plug.
Here is information on the Money Show, which costs you nothing to attend and they have numerous speakers and free presentations:
www.dcmoneyshow.com/ms/dcms/main.asp
If you are in the D.C. area stop by and say hello or bring/buy a
book to be signed.
The information and location is on the website above!
Remember:
Friday August 12, 2005
4:00 - 4:30 PM
Trader's Press Booth
#714 - 719