SPX Credit Spread Trader

It is deceptively simply but it is quite sophisticated. It is more than just selling OTM spreads. It pulls in technical analysis skills, risk management skills, feel for the market and understanding of option risks as well. It is a get rich slow approach but not a set and completely forget strategy since the risk is significant. Using a small portion of your account is a good way to avoid blow-ups.

As for the ages and experience I am, as of b-day on 9/20, 34 and been at this for 10 years more or less.

Phil


Quote from andysmith:

The strategy Phil coaches on this board is a rather sophisticated way of trading -- maybe not for the floor trader, but certainly for the part-time retail investors (like me).

I'm curious about the experience and age group of the readers/practitioners on this board. I wonder if any of you might be able to share the following info (I'm b and d):

AGE
a) 20-30
b) 30-40
c) 40-50
d) 50-60
e) 60-70

YEARS OF INVESTING EXPERIENCE (any type)
a) less than 2
b) 2 to 5
c) 5 to 10
d) 10 to 20
e) over 20
More...
 
Quote from rdemyan:

Well, you're no longer a 'virgin' :)

I had limit orders for$0.70 near the end, then $0.65 for quite a while and then finally $0.60. Whose your broker? Mine is OptionsExpress.

:)
More...

I got filled on that same spread at .75 right at the close (4:04 actually). Only a partial fill though, my order was for 20, only got 5. I'm at IB
 
Quote from lescor:

I got filled on that same spread at .75 right at the close (4:04 actually). Only a partial fill though, my order was for 20, only got 5. I'm at IB
More...


You guys are killing me!:mad:

I noticed a post on Chris Smith's board (The OptionClub.com), where Joel from ToS posted regarding getting fills on the SPX. Basically people have been asking for months why they need to call ToS to push getting their orders filled (after inputting them on the computer). Often after they call, they do get successful fills. He responded essentially (and I hope I got this right) that the SPX pit is human run and human managed, therefore you have to kick a little #$## every now and then (I'm overstating here). This is the first explanation I've heard that makes sense to me. Clearly this sort of pursuasion won't happen with OX, so I'm going to check into ToS again.

Oh yeah, I'm c and d (I feel like the old man now that I've learned Phil is only 34). Phil, somehow I always thought that your were at least in your 50s (must be the sage advice that you dispense that usually comes with age) :)
 
d & d - old man, old investor, young at options.


Quote from andysmith:

The strategy Phil coaches on this board is a rather sophisticated way of trading -- maybe not for the floor trader, but certainly for the part-time retail investors (like me).

I'm curious about the experience and age group of the readers/practitioners on this board. I wonder if any of you might be able to share the following info (I'm b and d):

AGE
a) 20-30
b) 30-40
c) 40-50
d) 50-60
e) 60-70

YEARS OF INVESTING EXPERIENCE (any type)
a) less than 2
b) 2 to 5
c) 5 to 10
d) 10 to 20
e) over 20
More...
 
Quote from andysmith:

The strategy Phil coaches on this board is a rather sophisticated way of trading -- maybe not for the floor trader, but certainly for the part-time retail investors (like me).

I'm curious about the experience and age group of the readers/practitioners on this board. I wonder if any of you might be able to share the following info (I'm b and d):

AGE
a) 20-30
b) 30-40
c) 40-50
d) 50-60
e) 60-70

YEARS OF INVESTING EXPERIENCE (any type)
a) less than 2
b) 2 to 5
c) 5 to 10
d) 10 to 20
e) over 20
More...




d & d here. Actively trading options for 7 years. I am old in years but young in spirit. Just hope the body follows the spirit.
 
Also a drawback of the SPX having the human factor which is what makes fills sometimes difficult. I would love to be a floor trader on SPX so I can sell my spreads in the pit or have someone doing it for me lol. (I mean directly, not through ToS)

As for my age, I was introduced to trading at the ripe old age of 18 (family friend started his own brokerage and I worked there a few weeks learning). He started one of the earliest discount brokerages and was in Forbes the summer I worked there as the cheapest discount brokerage in the US (1990). After that his business exploded. Eventually he sold the whole thing to Ameritrade. His wife traded options so I got exposure early. But in college and law school did not have much money to trade so I just learned little by little. Probably saved me from losing more than I did when I finally put real money on the line lol.

Phil

Quote from rdemyan:

You guys are killing me!:mad:

I noticed a post on Chris Smith's board (The OptionClub.com), where Joel from ToS posted regarding getting fills on the SPX. Basically people have been asking for months why they need to call ToS to push getting their orders filled (after inputting them on the computer). Often after they call, they do get successful fills. He responded essentially (and I hope I got this right) that the SPX pit is human run and human managed, therefore you have to kick a little #$## every now and then (I'm overstating here). This is the first explanation I've heard that makes sense to me. Clearly this sort of pursuasion won't happen with OX, so I'm going to check into ToS again.

Oh yeah, I'm c and d (I feel like the old man now that I've learned Phil is only 34). Phil, somehow I always thought that your were at least in your 50s (must be the sage advice that you dispense that usually comes with age) :)
More...
 
"So my investments were already in closed-end funds and cash before I started selling the spreads."

-- Phil, couple of questions:

1) Let's say a $100k tradeable account. How would you divide that up? Say $80k in tbills/funds of which you use $40k as margin for spreads, remaining $20k in cash for adjusting spreads? Am I close?

2) What about a $1M account -- would you divide it up the same way as a $100k account ($800k in tbills/funds of which you use $400k for spread margin, $200 in cash)?

Thank Coach!
 
This is just hypothetical so do not hold me too it lol.

If I only had $100k I would put it all in closed-end funds earning interest. That is my style so not everyone would agree. This way I could only sell up to 50% of acount in spreads and boost my return. The CEFs would provide about 7 - 10% when capital appreciation is factored in (got to diversify and pick them selectively) and then I could earn another 10 - 20% perhaps selling spreads for the year. Just my opinion. You could put all $100k in t-bills and still earn 15% a year selling spreads. Or use preferred stocks or diversified stock portoflio with covered calls and index spreads, etc. Imagination is the only limit.

With $1 million, I would probably dump it all in tiered t-bills and sell spreads against 50% - 60% of it!!!!! But that is because I am looking at it as a fund. For non-professional usage, you could invest the $1MM in anything diversified like you would normally do and then sell spreads on 30 - 50% at most. This is just my view not a general investment guidelines. YOu could really invest it in anything you wanted to and just use a portion to back up your spreads for some extra portfolio income.

The answer depends so much on risk tolerance, risk management, whether this is your life savings or extra capital set aside for investing, how soon you need the money (next year for retirement or 20 years or just want to keep investing each year, etc..) So it is really a very subjective answer.

Phil

Phil

Quote from andysmith:

"So my investments were already in closed-end funds and cash before I started selling the spreads."

-- Phil, couple of questions:

1) Let's say a $100k tradeable account. How would you divide that up? Say $80k in tbills/funds of which you use $40k as margin for spreads, remaining $20k in cash for adjusting spreads? Am I close?

2) What about a $1M account -- would you divide it up the same way as a $100k account ($800k in tbills/funds of which you use $400k for spread margin, $200 in cash)?

Thank Coach!
More...
 
"If I only had $100k I would put it all in closed-end funds earning interest. That is my style so not everyone would agree. This way I could only sell up to 50% of acount in spreads and boost my return. The CEFs would provide about 7 - 10% when capital appreciation is factored in (got to diversify and pick them selectively) and then I could earn another 10 - 20% perhaps selling spreads for the year. Just my opinion. You could put all $100k in t-bills and still earn 15% a year selling spreads."

-- Phil, yes of course, this is a very subjective matter and to each his own. Your comments will not be misinterprested as advice, just your very personal opinion. Nevertheless, it is very helpful. Couple of follow on questions:

1) If you put 100% in CEFs or tbills, what happens if you need some cash (more than the credit your spread brought in) to roll your spread in order to get out of a jam?

2) The returns from the spreads eclipses the returns from tbill/CEFs, making the whole thing a bit topsy turvy. Why not leave all in cash and just write spreads?
 
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