SPX Credit Spread Trader

Ozzy:

You are way off base and your comments are completely inappropriate. I have not marketed anything on this thread the entire time. I have no need to create names to do anything on this board since I have been giving away FREE REAL TIME TRADES and discussing them in great detail. Can you say the same?

I find it odd that you would take the time to comment when you admitted you have not gone through this thread fully. In case you do not read well, all these posts have asked questions and not just given praise.

I would suggest you ignore my thread since new people posting seems to put you off and I may be at risk at having new posters come in in bigger numbers. What you do not know cause you failied to even ask is that I told people in my FREE yahoo group of 1750 members that I was keeping this journal if they wanted to follow along since this format is better and told the people in the FREE yahoo group run by someone else (600+ members) where discussion of Iron Condors are going on to to also check out the journal if they wanted to follow along. So it makes sense that a lot of new people have recently come on board to follow the thread.

If 3 months of non-losing trades and detailed answers freely given to various questions and discussions bothers you, then you are free to avoid the thread all together.


Quote from ozzy:

I have not gone through this thread fully. But I noticed a lot of newly registered users (ie in the last month) who having nothing to say but praise towards you. I find this a little odd.

If you are planning on setting up a course there defenitely has to be a better way of marketing than your current method.

ozzy

P.S I might be wrong. But seeing all the Aug 2005 users with less than 10 posts licking your ass put me off a little.
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Without looking at the IV and actual b/a spread quotes I cannot really give a detailed response. Remember that as you move OTM the options time value premium begins to be worth less and less, especially with the negative IV skew that exists in SPX calls. So like a time decay curve, the premiums seem to shrink faster as you select strikes more OTM. Sometimes it could just be some increased activity at a certain strike changed the premiums and made things a little screwy.

As for which strike to select, it is easy to simply go for the largest credit but you have to weight all the risk factors. The SPX does have resistance at 1245 or so you might be inclined to look at the 1255 strikes which are about 30 points OTM with less than 30 days to expiration. Sometimes it is a better idea to give the index some cushion on the other side of the resistance line being so close in order to give you an opportunity to accurately read any resistance breakout.

3 strong up days in the market will put you right at 1255 or so. Using 1260 or 1265 gives you a position outside the resistance line. If the index runs to the resistance it might bounce once or twice before breaking through and time decay should kick in higher. it is like putting the sandbags 10 feet from your front door to protect against a flood as opposed to right at your doorstep. If the water begins to breakthrough you still have room to protect yourself.

Phil


Quote from rdemyan:

Coach:

Here's something I struggle with. As of the close of Monday, August 22, 2005 here are some bear call credit spreads that I'm looking at. SPX is at 1221.73

SEP 1270/1285 at $0.30 credit
SEP 1265/1280 at $0.65 credit
SEP 1260/1275 at $1.10 credit
SEP 1255/1270 at $1.25 credit (but based on closing b/a more like $1.50)

There seems to be a relatively large increase in the credit when the short goes from 1265 to 1260 (let's not argue too much about whether we could actually get $1.10 credit).

I follow some technical analysts as well as StockTA.com. None of them list 1260 as a major level for resistance. Currently it looks like 1225 is strong resistance. So, while I feel the need to be very safe, it seems like in this case I would rather put the 1260/1275 on as opposed to the 1265/1280.

I'd be curious to know what you're thought process is on the scenario I've presented above.
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I opened the following positions last week:

SPX Sept 1165/1175 put spread for a credit of $.75
SPX Sept 1265/1275 call spread for a credit of $.75

I would have preferred to place my spreads the previous week but sometimes life gets in the way. I was too busy to evaluate things close enough so instead of rushing to make a trade I waited until I could do my homework, I probably ended up with smaller premiums but only time will tell if I made the right choices.

My thinking is that the trading levels will remain low (but should begin picking up soon) leaving us in a trading range. I have tried to place my short options a few strikes above/below the support/resistance levels but I will look to take profits if the market makes a good move in either direction. Right now I am content to let time decay work its magic!

ryan
 
Hey Ozzy,
Your comment is completely off-base. Next time, show some restraint and take the time to assess the situation first before commenting.
 
Phil,

I'm trying the following approach in selecting my short strikes:

1) Locate where strong support and resistance lies

2) Add 10 to the resistance, subtract 10 from the support -- these are the points at which I will take action (adjustment,...)

3) Add 15 to the higher adjustment point, subtract 15 from the lower adjustment point -- these are my short strikes.

Whaddya think?
 
Quote from ozzy:

I have not gone through this thread fully. But I noticed a lot of newly registered users (ie in the last month) who having nothing to say but praise towards you. I find this a little odd.

If you are planning on setting up a course there defenitely has to be a better way of marketing than your current method.

ozzy

P.S I might be wrong. But seeing all the Aug 2005 users with less than 10 posts licking your ass put me off a little.
More...

Ozzy

I do not at all recommend bear call/bull put spreads (far too much risk/short gamma), and I wouldn't know "coach" from Craig T. Nelson, but Phil does seem to be a nice guy who takes the time to respond to people's questions in detail. Maybe that's why some people like him.
 
I agree. I was wrong in my comments. I think it was due to the lack of excercise today. I get a little frisky when that happens. I intend to go through the thread in the future.

My apologies again.

Regards
ozzy
 
Ozzy, don't know where those comments are coming from?? I am not an alias of Optioncoach and have been here at ET for a couple years. If you took the time to read the journal postings before commenting maybe you would be better informed. I have been here from the beginning of this journal and have never once felt that Optioncoach was pushing anything (courses, books, etc) even though he is an author of a book on option trading/risk management. He's always taken the time to be helpful to those who had questions and was never selling anything. Maybe you don't agree with the style of trading, that's fine, there are as many trading styles as traders, but don't make conclusions that are based on the last few posts either.

Jeff.
 
Ryan:

With 23 days to expiration, I feel that your call and put strikes seem quite safe. On the downside, we have support levels at 1218/1220 and then again at 1200 and just below that. So 1175 seems like a safe strike without any major catalyst. As you know I also have puts with 1175 as a short strike.

On the upside we definitely are meeting some overhead resistance right now and before at 1245-ish. I think 1265 is far enough out of hte money that even some post-labor day rallies will not threaten that strike.

As always have an idea of what you would do should the water come rushing into your front yard.

Phil

Quote from ryank:

I opened the following positions last week:

SPX Sept 1165/1175 put spread for a credit of $.75
SPX Sept 1265/1275 call spread for a credit of $.75

I would have preferred to place my spreads the previous week but sometimes life gets in the way. I was too busy to evaluate things close enough so instead of rushing to make a trade I waited until I could do my homework, I probably ended up with smaller premiums but only time will tell if I made the right choices.

My thinking is that the trading levels will remain low (but should begin picking up soon) leaving us in a trading range. I have tried to place my short options a few strikes above/below the support/resistance levels but I will look to take profits if the market makes a good move in either direction. Right now I am content to let time decay work its magic!

ryan
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