SPX Credit Spread Trader

I see what you are saying, I see where it would be better for you to close the spread and roll up. I just caught my error in thinking. I thought I could just sell more calls of the higher strike and keep the same margin. This isn't true, if I did sell more calls then before I would have a number of naked calls (I shudder thinking about that).

ryan

Quote from optioncoach:


Look at my 1260/1275 spread and compare rolling the 1260 to a 1265 call or rolling the 1260/1275 spread to a 1265/1280 spread.

Phil
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Quote from optioncoach:

Jeff:

Congrats on the nice trade. I still have my put spreads but I have limit orders to get out but I am being greedy on the b/a spread so we will see if I get filled. I am far enough OTM to not worry.

I also see 1225-ish and 1200-ish as past support areas but 1200 or so is as high as I would go for August as long as the premium was right. 1190/1205 certainly sounds like good strikes with about 2 weeks to go to expiration. My motto is "Nickles and Dimes a Thousand Times!"

Good luck!

Phil
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I like that motto, sounds like a good title for a book. I held off on the new bull put spread until today. I was looking for the markets to retrace a bit and thankfully they did. I wrote the 1200/1185 AUG bps for $.70 although I just seen the spread hit a high of $1.00! Although I am happy with the credit I recieved.

Thanks for your comments Coach! :cool:

Jeff.
 
Been quiet trading lately but today I wanted to close out my puts to open margin because on such a down day I know I can grab sweet OTM puts for September. Since the AUG put spread had a small profit I figure I would take it and look for those nice SEPT premiums.

My put positions was:

100 SPX AUG 1175/1185 Put Spreads @ $0.50

I closed for a net credit of $0.20 or $2,000.
Return on margin of $100,000 of 2%.

Not my usual close the spread for at least 60% of the credit or more but I need margin room.

Will post when I open a SEPT position.



REMEMBER CURRENT POSITION:

115 SPX AUG 1260/1275 Call Spreads @ $0.60



Phil

"Nickles and Dimes a Thousand Times"
 
Hi Phil,

Nice market correction today! I posted this on the other board but thought I'd post it here too:

If you put on an SPX AUG05 1200/1210/1250/1260 IC on Friday 8/12/05,
one week prior to expiration, the credit is $1.90, and the probability
is around 75%.

Maybe not a great trade for at least two reasons:
1) for 75% probability, the credit should be ~$2.50
2) exp week has sky high gamma

But this is one heck of a return for 1 week. Now how come I never see
strategies based around this approach?
 
I am looking at Sep bear call spreads. The 1280 call delta is .15, I am looking for a delta of .12 or less to short. The next available call is 1300 with a delta of .07. How/when will strikes between those 2 open for trading?

ryan
 
I am not quite sure how you can predict what the IC spread price will be on August 12?

Phil


Quote from andysmith:

Hi Phil,

Nice market correction today! I posted this on the other board but thought I'd post it here too:

If you put on an SPX AUG05 1200/1210/1250/1260 IC on Friday 8/12/05,
one week prior to expiration, the credit is $1.90, and the probability
is around 75%.

Maybe not a great trade for at least two reasons:
1) for 75% probability, the credit should be ~$2.50
2) exp week has sky high gamma

But this is one heck of a return for 1 week. Now how come I never see
strategies based around this approach?
More...
 
The problem is when you go so far OTM two expiration months out, the strikes move from 5 points apart to 10 or even more. Additional higher strikes can be added either after the August expiration or if the index moves back higher. For now 1280 is as high as the 5-point spread strikes go and this could change, as I said, if the index moves back higher or the August ones expire, although nothing is for certain.

Phil

Quote from ryank:

I am looking at Sep bear call spreads. The 1280 call delta is .15, I am looking for a delta of .12 or less to short. The next available call is 1300 with a delta of .07. How/when will strikes between those 2 open for trading?

ryan
More...
 
What a beautiful set of down days we have had! Nothing better to do on such a dip then to open put spreads which I did:

SPX @ 1226

Sold 110 SPX SEPT 1165/1175 Put Spreads @ $0.95

Credit = $10,450
Margin = $110,000
Return = 9.5%

This is a nice one given the time to expiration (41 days) and back to back large down days. May stick with puts for now but if we get a good run up I may take the call side for some premium.

I am starting to use slightly large maximum margin than in May/June but with the large profits in JUNE and JULY I can afford to increase it slightly, still sticking with same risk management approach.


Including the above my current positions are:


115 SPX AUG 1260/1275 Call Spreads @ $0.60

110 SPX SEPT 1165/1175 Put Spreads @ $0.95


Phil
 
Quote from andysmith:

Phil,

Please explain a bit about buying put spreads on down days and call spreads on up days -- it is a bit counter intuitive!
More...

If you have a support level in mind (which I'm sure Phil does around 1200ish) and the index drops like it has today and yesterday, the puts go up in price. You can then sell an OTM bull put spead for more premium. After you sell the spread you look for a good upward move in the index which will drop the cost of buying the put spread back, then you take your profit.

ryan
 
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