SPX Credit Spread Trader

I guess my post wasn't clear.

I DID get the fill at $0.50. The 1115 was bought for $1.25 and the 1130 was sold for $1.75.

As soon as I realized that I had gotten a very good fill, I placed the same order again.

That order is currently open, and I'm trying to get the same fill (the replicated trade I mentioned earlier). This second order is the one that I'm not able to get filled at $0.50 (I thought I might get $0.35 or possibly $0.40 if the SPX is down around 8 points).
 
Ahhhh my bad.

Well then let me re-install my heart felt congrat on getting such a GREAT FILL. $0.50 is awesome at those strikes. Congrats again.

I think, as you implied, you got lucky on the $0.50 and doubt you can get it again.

I am currnetly trying to get some call spreads on for my open put spread to get the Iron Condor because I think time decay is going to kick in even if we have an upward movement so I just want to grab some OTM income while I can for the next 3 weeks.

Congrats again.

phil

Quote from rdemyan:

I guess my post wasn't clear.

I DID get the fill at $0.50. The 1115 was bought for $1.25 and the 1130 was sold for $1.75.

As soon as I realized that I had gotten a very good fill, I placed the same order again.

That order is currently open, and I'm trying to get the same fill (the replicated trade I mentioned earlier). This second order is the one that I'm not able to get filled at $0.50 (I thought I might get $0.35 or possibly $0.40 if the SPX is down around 8 points).
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Coach,

I have a couple of open put spreads that I want to turn into ICs. Would you mind sharing what strike prices you're currently trying to get filled on your bear call spreads. I too feel that if I don't place those trades today, the time decay over this weekend will be large and make it difficult to get decent credits next week.


Thanks.
 
I am looking at 1255/1265 since 1255 is outside the last resistance point of 1245. However the premiums are thin there so going above that will get you even less than the potential $0.35 I think I can get. I probably could move my strikes down given the current short trend lower and the fact that a move back to 1245 is unlikely in 3 weeks but I hate to deviate from my risk management plans so if I cannot get filled I will pass. On my other put spread i did add the 1270/1285 a few days ago before the bigger dip lately.

Right now there is not much more that can be done on the upside given the drop in the market so I will just wait until time decay finishes its job and then salivate over OCT premiums soon.

Phil

Quote from rdemyan:

Coach,

I have a couple of open put spreads that I want to turn into ICs. Would you mind sharing what strike prices you're currently trying to get filled on your bear call spreads. I too feel that if I don't place those trades today, the time decay over this weekend will be large and make it difficult to get decent credits next week.


Thanks.
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Yesterday I was looking at the same spread but decided to take on a little more risk and sold the 1250/1260 for $.65. I rolled down from a 1275/1285 spread and liked the premium and risk of my new position. At the moment I am more worried about my 1165/1175 put spread. I would be looking to make an adjustment or close-out at 1190. Hopefully the 1200 resistance will provide a slight bounce to the market but we will see what the market gives us.

ryan

Quote from optioncoach:

I am looking at 1255/1265 since 1255 is outside the last resistance point of 1245. However the premiums are thin there so going above that will get you even less than the potential $0.35 I think I can get. I probably could move my strikes down given the current short trend lower and the fact that a move back to 1245 is unlikely in 3 weeks but I hate to deviate from my risk management plans so if I cannot get filled I will pass. On my other put spread i did add the 1270/1285 a few days ago before the bigger dip lately.

Right now there is not much more that can be done on the upside given the drop in the market so I will just wait until time decay finishes its job and then salivate over OCT premiums soon.

Phil
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Well, I'm trying to get a 1255/1270 bear call spread filled at $0.40. No luck so far [I might have to go down to a measily $0.35 but at least I got $0.50 on the other half :)].

Coach, I wanted to ask you about commitment of margin. My general strategy and I thought you advocated a similar strategy, is to not commit all of one's margin during a given month. The strategy is too keep around 1/3 to 1/2 of the margin uncommitted to take advantage of an unexpected good opportunity but even more importantly to have margin available to start putting on the next month's trades 5 to 6 weeks before the next month's option expiration.

Since your margin is currently 100% committed, does that mean that you intend to exit some or all of your current positions before opex day of this month, so that you can free up margin to put positions on for next month?
 
What you said is correct and I did keep my a portion of my margin open for taking advantage of opportunities. Those opportunities did arise and I did take advantage of them so now I am fully invested. I do not like idle cash earning nothing so I try not to keep cash sitting around too long if the opportunities present themselves.

But being fully committed does not hurt me now because SEPT is 3 weeks to expiration and OCT is too far out for me to consider so I have no need keep idle cash at this moment.

As you stated, and as seen by this thread, I rarely hold all positions to expiration because I do want that cash free when OCT is with 45 days or so to expiration. So as time decay kicks in next week I will exit if I can grab at least 60 - 70% of my premium.

I rarely hold any positions to expiration except for short-term scalps entered into near expiration or positions where the net credit was small and sufficiently OTM, that it might be better to just let them expire worthless, a la my 1260/1275 opened for about $0.35.

Phil


Quote from rdemyan:

Well, I'm trying to get a 1255/1270 bear call spread filled at $0.40. No luck so far [I might have to go down to a measily $0.35 but at least I got $0.50 on the other half :)].

Coach, I wanted to ask you about commitment of margin. My general strategy and I thought you advocated a similar strategy, is to not commit all of one's margin during a given month. The strategy is too keep around 1/3 to 1/2 of the margin uncommitted to take advantage of an unexpected good opportunity but even more importantly to have margin available to start putting on the next month's trades 5 to 6 weeks before the next month's option expiration.

Since your margin is currently 100% committed, does that mean that you intend to exit some or all of your current positions before opex day of this month, so that you can free up margin to put positions on for next month?
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Coach:

When you say "I will exit if I can grab at least 60 - 70% of my premium.", is that for the overall IC premium or do you apply these percentages individually against the premium on each side.

My reservation about committing more margin is that the SPX price might be near enough to one side of the iron condor to prevent exiting that side with a reasonable profit. Exiting only one side of the condor before opex does not free up the margin. So that's why I'm interested in knowing if you apply the 60 -70% to the IC as a whole or against each side of it.

I guess there are tradeoffs to each method. I suppose if the market is very volatile, your method might keep you in the spread much longer than you would like. On the other hand, in a relatively quiet market, my strategy leaves a significant amount of margin on the sideline that could be earning credit and could allow me to exit before opex week with a reasonable profit.

I guess one of the other reasons I leave 1/3 to 1/2 of the margin on the sideline is that I worry about a wipeout strategy resulting from an unexpected catastrophe.
 
I am referring to each leg individually. Even though just clearing off my call sides will not free up margin, time decay usually allows me to get out of my positions before expiration unless the market has really moved closed to short strikes. Then an adjustment is required. So even though the market has moved lower, my 1140/1155 could shrink down considerable in the next week or so and even the 1165/1175, especially on a few small up days. So I am referring to the legs.

This is not common for me to load up like this but the opportunities were there so I do not mind not having free margin right now. Time decay works wonder the last few weeks.

I want you to remember that there is a differenc between 100% of your allocated margin and 100% of your PORTFOLIO. I do not use 100% of my portfolio currently in these positions so losses will never wipe me out. I am referring to 100% of the margin amount I allocate to doing this strategy which at times ranges from 35% to 70% of my portfolio depending on the market and what I want to trade. SO right now I have 100% of my maximum margin I am using for this strategy but NOT 100% of my portfolio. I park a lot of money in Closed-end funds paying 6% so that I have monthly dividend income and capital appreciation to add to my returns and smooth out my volaitlity a bit. Since they are stocks, I can move in and out of them when needed to free up funds or invest profits. I do not flip them so I am not moving money in and out frequently but if I need to readjust my allocations it is quite easy to do so.

Phil

Quote from rdemyan:

Coach:

When you say "I will exit if I can grab at least 60 - 70% of my premium.", is that for the overall IC premium or do you apply these percentages individually against the premium on each side.

My reservation about committing more margin is that the SPX price might be near enough to one side of the iron condor to prevent exiting that side with a reasonable profit. Exiting only one side of the condor before opex does not free up the margin. So that's why I'm interested in knowing if you apply the 60 -70% to the IC as a whole or against each side of it.

I guess there are tradeoffs to each method. I suppose if the market is very volatile, your method might keep you in the spread much longer than you would like. On the other hand, in a relatively quiet market, my strategy leaves a significant amount of margin on the sideline that could be earning credit and could allow me to exit before opex week with a reasonable profit.

I guess one of the other reasons I leave 1/3 to 1/2 of the margin on the sideline is that I worry about a wipeout strategy resulting from an unexpected catastrophe.
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Thanks for the clear explanation. I was thinking that you meant your entire portfolio, so I'm glad you cleared up my misconception.
 
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