SPX Credit Spread Trader

[smilingsynic]

Quote from optioncoach:

Your statement unfortunately does not say anything. Where have I stated that I choose to always receive less compensation for taking on the same risk?

I do not mind criticism but blank criticism without any analysis or alternative suggestions does not add anything.

Phil

Sigh.

By choosing to trade a less competitive product like SPX, you receive less compensation for the risk you take. Indeed, after that bought-back-a -deep OTM-spread-at-25-cents-and-at-the-same
-time-write-a-less-OTM-spread-at-15- cents-fiasco, I thought the lesson would be obvious. Clearly you and your students should be trading something more competitive

It would make much more sense if you as a so-called guru would admit that perhaps you need to do further research so you have a better idea which products have better executions/better liquidity. But you choose to go the"I'll stick with what I brought to the dance approach", an obvious appeal to precedent. And also a bad way to trade.

 

[smilingsynic]

I am not disagreeing with you for the sake of disagreeing. But as a self-proclaimed expert (book, radio show, handle as "option coach"), you really should be more prepared to deal with criticism (handling praise--anyone can do that!).

I think you are doing yourself and your readers a disservice for (1) understating the risk associated with the strategy; (2) failing to consider that the strategy could and would be a huge loser in the case of gap move and rising volatility. You may THINK you have addressed these adequately, but I don't think you have. In this low vol, dull market, credit spreads have been easy money. But that will change--it always does!

There are enough self-proclaimed experts--seminar speakers, book authors, service sellers, system writers--already on ET. Some are good, but many, many of them are overrated.

I have read this thread since you started. You seem like a genuinely nice, if not thin-skinned, guy, and I think you really want to help people. That said, you really need to do some more homework before you give out any more advice.

That is my opinion--take it as you wish. I wish you no harm.

Best,
synic

 

[Chipper7]

And what is your suggestion for "products (that) have better executions/better liquidity" that would be preferable in this strategy and why?

Chip

 

[El OchoCinco]

Smiling:

I just want to say a few things:

1. I can deal with useful criticism. Your comments merely criticise the trades wihtout offering any alternative. How useful is that? If you have something to offer than please do. But to sit back and say "What you are doing is wrong" does not help anyone or any readers of this thread. So do not say I cannot handle criticism. I actually told you, the criticism is fine if it adds something to the discussion. Yours did not except to say the risk is too much or the product is wrong. But you stopped there. No one here gains from simply shouting from the sidelines. Notice all the questions you got back to elaborate more which you ignored?

2. I never understated the risks of this strategy. Please find a post where I brush off the risks of this strategy? Please show me how the SPX will gap down tremendously or I have dismissed this as a consideration? Even after 9/11 the index did not gap down like a stock like GOOG or BIDU gaps down. I have discussed the risks repeatedly and mentioend this is not a beginner strategy by any means. If a reader thinks this is not a strategy with serious risks, how much more can I make it clearer.

3. You have a negative view of credit spreads. Credit spreads can be traded in neutral, bullish or bearish markets. So since that is the only 3 markets that can exist really, how are credit spreads not effective just because the market is no longer dull? YOU said credit spreads were easy money in your comments. I never said credit spreads are easy money. And credit spreads are like any other strategy. It makes money if applied correctly and you follow good risk management. So why do you claim that one cannot trade credit spreads in bullish or bearish markets?

4. I am no self-proclaimed anything on here. I have nothing to sell here. Please re-read the thread and see how I barely mention my book here. In fact, my book does not cover this strategy at all and I have told people not to buy my book looking for details on this strategy. So do not lump me in with those on here trying to sell stuff. My thread and show are all free, no purchase necessary.

5. You are telling me to do my homework. Thank you for the advice. So far you have not provided any contributions to the discussions beyond the criticism. I actually would welcome your contributions. I have been making money in the market for years and I do not mind if people tell me my way does not work the best. I am sure there are so many different ways to make money, you cannot imply that you know the best way. The strategies are meaningless. It is the risk and trade management approach that counts.

So I take no offense to anything you have said although your comments seemed to imply I did not know what I am doing and I do take offense to that.

Otherwise you made your point and no need to take away from the thread subject matter any longer...

Phil

Quote from smilingsynic:

I am not disagreeing with you for the sake of disagreeing. But as a self-proclaimed expert (book, radio show, handle as "option coach"), you really should be more prepared to deal with criticism (handling praise--anyone can do that!).

I think you are doing yourself and your readers a disservice for (1) understating the risk associated with the strategy; (2) failing to consider that the strategy could and would be a huge loser in the case of gap move and rising volatility. You may THINK you have addressed these adequately, but I don't think you have. In this low vol, dull market, credit spreads have been easy money. But that will change--it always does!

There are enough self-proclaimed experts--seminar speakers, book authors, service sellers, system writers--already on ET. Some are good, but many, many of them are overrated.

I have read this thread since you started. You seem like a genuinely nice, if not thin-skinned, guy, and I think you really want to help people. That said, you really need to do some more homework before you give out any more advice.

That is my opinion--take it as you wish. I wish you no harm.

Best,
synic

 

[rdemyan]

Well said, Coach. Let's get back to the business at hand.

I thought your were looking to place trade(s) today for October. I'm interested to see what you suggest. I've already got three of my own ICs for October and thought I would wait for your suggestion. Today's Friday and a fairly good up day. Probably a good day for a bear call spread deep OTM.

Quote from optioncoach:

Smiling:

I just want to say a few things:

1. I can deal with useful criticism. Your comments merely criticise the trades wihtout offering any alternative. How useful is that? If you have something to offer than please do. But to sit back and say "What you are doing is wrong" does not help anyone or any readers of this thread. So do not say I cannot handle criticism. I actually told you, the criticism is fine if it adds something to the discussion. Yours did not except to say the risk is too much or the product is wrong. But you stopped there. No one here gains from simply shouting from the sidelines. Notice all the questions you got back to elaborate more which you ignored?

2. I never understated the risks of this strategy. Please find a post where I brush off the risks of this strategy? Please show me how the SPX will gap down tremendously or I have dismissed this as a consideration? Even after 9/11 the index did not gap down like a stock like GOOG or BIDU gaps down. I have discussed the risks repeatedly and mentioend this is not a beginner strategy by any means. If a reader thinks this is not a strategy with serious risks, how much more can I make it clearer.

3. You have a negative view of credit spreads. Credit spreads can be traded in neutral, bullish or bearish markets. So since that is the only 3 markets that can exist really, how are credit spreads not effective just because the market is no longer dull? YOU said credit spreads were easy money in your comments. I never said credit spreads are easy money. And credit spreads are like any other strategy. It makes money if applied correctly and you follow good risk management. So why do you claim that one cannot trade credit spreads in bullish or bearish markets?

4. I am no self-proclaimed anything on here. I have nothing to sell here. Please re-read the thread and see how I barely mention my book here. In fact, my book does not cover this strategy at all and I have told people not to buy my book looking for details on this strategy. So do not lump me in with those on here trying to sell stuff. My thread and show are all free, no purchase necessary.

5. You are telling me to do my homework. Thank you for the advice. So far you have not provided any contributions to the discussions beyond the criticism. I actually would welcome your contributions. I have been making money in the market for years and I do not mind if people tell me my way does not work the best. I am sure there are so many different ways to make money, you cannot imply that you know the best way. The strategies are meaningless. It is the risk and trade management approach that counts.

So I take no offense to anything you have said although your comments seemed to imply I did not know what I am doing and I do take offense to that.

Otherwise you made your point and no need to take away from the thread subject matter any longer...

Phil

 

[El OchoCinco]

Quote from optioncoach:

I am looking to October. In my other account I did grab a bunch 1150/1155 spreads for $0.25 before the market began to surge, but for this account, OX has not cleared up the expired options so no cleared up margin yet lol.

Although the uptrend line since May was broken through at 1220 or so the market did bounce off near 1200 and rally back to today's 1237 or so. Interestingly enough, the long upward trendline became resistance for the SPX once it was broken as support and the SPX bounced back off that same line at around 1243 a few days ago.

So right now the trend appears to be a correction of the bearish breakout. One guess is that the market could continue its downward move back towards 1200 before picking its new direction. If the market can get back to and break through 1245 on some strength then it should continue the upward movements.

With that in mind, for October I would be willing to look at put strikes no higher than 1180 or so. ON the call side, I would prefer to use 1300 or over as short strikes, maybe 1290.

I still do not see an identifiable trend to stick with one side although I currently see a correction today of a short-term bear trend. I still see some more sideways movement coming up although a fed meeting and the aftermath of Katrina could have an effect.

Will see what happens on Monday and try and grab some OTM puts outside of the 1200 support area.

Phil

 

[smilingsynic]

Quote from optioncoach:

Smiling:

I just want to say a few things:

1. I can deal with useful criticism. Your comments merely criticise the trades wihtout offering any alternative. How useful is that? If you have something to offer than please do. But to sit back and say "What you are doing is wrong" does not help anyone or any readers of this thread. So do not say I cannot handle criticism. I actually told you, the criticism is fine if it adds something to the discussion. Yours did not except to say the risk is too much or the product is wrong. But you stopped there. No one here gains from simply shouting from the sidelines. Notice all the questions you got back to elaborate more which you ignored?

2. I never understated the risks of this strategy. Please find a post where I brush off the risks of this strategy? Please show me how the SPX will gap down tremendously or I have dismissed this as a consideration? Even after 9/11 the index did not gap down like a stock like GOOG or BIDU gaps down. I have discussed the risks repeatedly and mentioend this is not a beginner strategy by any means. If a reader thinks this is not a strategy with serious risks, how much more can I make it clearer.

3. You have a negative view of credit spreads. Credit spreads can be traded in neutral, bullish or bearish markets. So since that is the only 3 markets that can exist really, how are credit spreads not effective just because the market is no longer dull? YOU said credit spreads were easy money in your comments. I never said credit spreads are easy money. And credit spreads are like any other strategy. It makes money if applied correctly and you follow good risk management. So why do you claim that one cannot trade credit spreads in bullish or bearish markets?

4. I am no self-proclaimed anything on here. I have nothing to sell here. Please re-read the thread and see how I barely mention my book here. In fact, my book does not cover this strategy at all and I have told people not to buy my book looking for details on this strategy. So do not lump me in with those on here trying to sell stuff. My thread and show are all free, no purchase necessary.

5. You are telling me to do my homework. Thank you for the advice. So far you have not provided any contributions to the discussions beyond the criticism. I actually would welcome your contributions. I have been making money in the market for years and I do not mind if people tell me my way does not work the best. I am sure there are so many different ways to make money, you cannot imply that you know the best way. The strategies are meaningless. It is the risk and trade management approach that counts.

So I take no offense to anything you have said although your comments seemed to imply I did not know what I am doing and I do take offense to that.

Otherwise you made your point and no need to take away from the thread subject matter any longer...

Phil

Your response is one giant straw man. You are simply distorting what I said. Arguing with you is a waste of time; your mind is already made up (sorry that I confused you with the facts).

Btw, credit spreads are not a bad strategy. But you put them on with so much size/leverage you are courting disaster. I cannot believe you haven't picked this up already.

Overleveraging one's capital with deep OTM credit spreads: 90% winners (one month at a time), 100% losers (one career at a time).

 

[El OchoCinco]

Just avoid the thread so the rest of us can focus on the topic. It is not a strategy for you. We understand.

Thank you

Phil

Quote from smilingsynic:

Your response is one giant straw man. You are simply distorting what I said. Arguing with you is a waste of time; your mind is already made up (sorry that I confused you with the facts).

Btw, credit spreads are not a bad strategy. But you put them on with so much size/leverage you are courting disaster. I cannot believe you haven't picked this up already.

Overleveraging one's capital with deep OTM credit spreads: 90% winners (one month at a time), 100% losers (one career at a time).

 

[Dr. Zhivodka]

Hi OC

Wow, that is some kind of deep OTM strikes

I can see why you only adjust 1/6 of any given year.

That being said there many ways to skin the Gato, as it were. Options are flexible; one should always use them in such a manner.

Re my .55 credit post: There many many ways to put on +theta positions without doing it robotically, mechanically, and without being "naked" or without taking on additional risk. No time to give lots of examples.

One of my current positions

Oct SPY call credit .55 127/129
Oct SPY put credit .40 120/118

These are all legged over many days with no greater risk exposure (most of time less risk) than a putting on a straight IC or BC or BP mechanically due to my Sept long Gamma that still existed until today. Very simple stuff…..all without costing more or demanding more prem from ones account.

Regards,
Doc Z.

Quote from rdemyan:

Well said, Coach. Let's get back to the business at hand.

I thought your were looking to place trade(s) today for October. I'm interested to see what you suggest. I've already got three of my own ICs for October and thought I would wait for your suggestion. Today's Friday and a fairly good up day. Probably a good day for a bear call spread deep OTM.

 

[El OchoCinco]

Thanks for the examples. I just personally do not want to leg into these positions like that as I feel I can get whipsawed legging in the wrong way. For example I would not want to take on the margin of opening up with the naked call or put first and waiting a few days to leg in. I am not saying it is not a viable approach at all, just not within my comfort level of timing those leg entries. I would rather slap on the entire spread and be in at once. For me it is harder to try and time the legs correctly.

127 would make me a little nervous if we breakthrough the 1245 resistance but I still see plenty of storng headwinds against anupward move. Changed circumstances from the Fed and oil dropping may provide enough thrust to break that.

I use the E-mini for my intraday swing trading .

Phil

Quote from Dr. Zhivodka:

Hi OC

Wow, that is some kind of deep OTM strikes

I can see why you only adjust 1/6 of any given year.

That being said there many ways to skin the Gato, as it were. Options are flexible; one should always use them in such a manner.

Re my .55 credit post: There many many ways to put on +theta position without doing it robotically, mechanically, without being "naked." or taking on additional risk. No time to give lots of examples.

One of my current positions

Oct SPY call credit .55 127/129
Oct SPY put credit .40 120/118

These are all legged over many days with no greater risk exposure (most of time less risk) than a putting on a straight IC or BC or BP mechanically due to my Sept long Gamma that still existed until today. Very simple stuff…..all without costing more or demanding more prem from ones account.

Regards,
Doc Z.