SPX Credit Spread Trader

ryank · Sep 13, 2005

I'm planning on getting out of my 1250/1260 spread tomorrow and look at new spreads for Oct. I took some glances at spreads today and found some decent premiums at some attractive strikes. Will have to wait and see if they are still available after I close out my Sept spreads.

ryan

Quote from optioncoach:

What a beautiful day in the market lol. There is just too much headwinds in this market to push higher right now. Good day to look at OCT put spreads tomorrow if we have a flat or down day.
In the home stretch for expiration!

Phil

B5476 · Sep 13, 2005

I tried really hard during the last 30 minutes of the market to fill put credit spreads (both 1150/1160 and 1160/1170) at midpoint of B/A spread and even offered them at 0.15 off midpoint. No fills. I guess they didn't want to play today.

Phil, I think you are right on target that there should be a good opportunity to get fills in the morning.

This is my first posting on this board after following the thread for several months. This is probably the best trading thread I have ever seen. Keep up the good work.

daytrader85 · Sep 13, 2005

Quote from B5476:

I tried really hard during the last 30 minutes of the market to fill put credit spreads (both 1150/1160 and 1160/1170) at midpoint of B/A spread and even offered them at 0.15 off midpoint. No fills. I guess they didn't want to play today.

Phil, I think you are right on target that there should be a good opportunity to get fills in the morning.

This is my first posting on this board after following the thread for several months. This is probably the best trading thread I have ever seen. Keep up the good work.

You said you were trying to get filled on both 1150/1160 and 1160/1170 put spreads. If you were to get filled on both spreads, wouldn't that close your position on the 1160 contract, since, you are selling 1160 strike as part of the 1150/1160 spread, and then buying it on the 1160/1170 spread?

Or am I missing something??

Daytrader85

fh2000 · Sep 13, 2005

Coach,

You said for beginners, it is better to try to trade 1 or 2 contracts first. If the credit for one 1140/1150 put spread is, say, $0.50. The total credit received will be just $50.00. And the risk is the spread of two strikes which is $1000 in this case. Is my math correct?

B5476 · Sep 13, 2005

Quote from daytrader85:

You said you were trying to get filled on both 1150/1160 and 1160/1170 put spreads. If you were to get filled on both spreads, wouldn't that close your position on the 1160 contract, since, you are selling 1160 strike as part of the 1150/1160 spread, and then buying it on the 1160/1170 spread?

Or am I missing something??

Daytrader85

Daytrader, you are absolutely correct; I did not state that well. I tried to get one or the other of those two spreads filled but was succesful with neither. I could not have done both since that would have given me both a long and a short on the 1160 strike.

daytrader85 · Sep 13, 2005

Quote from fh2000:

Coach,

You said for beginners, it is better to try to trade 1 or 2 contracts first. If the credit for one 1140/1150 put spread is, say, $0.50. The total credit received will be just $50.00. And the risk is the spread of two strikes which is $1000 in this case. Is my math correct?

You are right. But actually, your maximum loss on this trade would be $9,950 because you recieved $50 credit when opening the position. Am I right, Coach??

daytrader85 · Sep 13, 2005

Quote from B5476:

Daytrader, you are absolutely correct; I did not state that well. I tried to get one or the other of those two spreads filled but was succesful with neither. I could not have done both since that would have given me both a long and a short on the 1160 strike.

That's what I thought. I wasn't sure at first, I actually had to read your post a few times over, just to make sure I was reading it right.

Daytrader85

El OchoCinco · Sep 13, 2005

Yes, the total credit is the premium * 100 ($50.00) and the risk is the difference between the strikes * 100 ($1,000) MINUS Credit Received ($50.00) = $950.00.

Phil

Quote from daytrader85:

You are right. But actually, your maximum loss on this trade would be $9,950 because you recieved $50 credit when opening the position. Am I right, Coach??

zman7854 · Sep 13, 2005

Quote from daytrader85:

You are right. But actually, your maximum loss on this trade would be $9,950 because you recieved $50 credit when opening the position. Am I right, Coach??

That's incorrect, max loss for 1 contract is $950 ($1000 for the spread - $50 credit) not $9950. :eek:
If you are thinking 10 contracts then max loss is $9500 ($10000 spread - $500 Credit)

daytrader85 · Sep 13, 2005

Quote from zman7854:

That's incorrect, max loss for 1 contract is $950 ($1000 for the spread - $50 credit) not $9950. :eek:
If you are thinking 10 contracts then max loss is $9500 ($10000 spread - $500 Credit)

Oops. Went too fast in the math calculation there.

Thanks for catching that.