SPX Credit Spread Trader

I closed the SPY FLY I opened as a hedge (114/117/120) today. I opened 30 of them for $0.45 and closed it at $0.90 for $1,000 profit after commission. I am seeing strength creep in to the market and do not want to lose money on the hedge after I already rolled down my SPX positions once for a cost. I will see if I will close my 1190/1180 bear put spreads as well.

Of course taking a hedge off means that if the market moves lower you do not make profits on those hedges as before but I adjusted lower for more room so I think if I can take some profits here to reduce those costs it would be better than taking additional losses on the partial hedges with 4 trading days left. I feel with enough room now I may not need the hedges anymore.

Well I hope I am right but basically I do not want to take any losses on the partial hedges after having adjusted.

Phil
 
I also just closed my SPX 1190/1180 bear put spread. I opened 10 at $3.00 and just sold them for $4.30 for a profit of $1,250. I do not want to take a $3,000 loss if the market surges above 1190 and stays there so want to take these profits now as we head into expiration week.

Phil
 
Two orders. I use OX.

Yeah, maybe I haven't placing these orders correctly. When I adjusted yesterday, no sooner had I bought back my 1150/1160 bull put, then the market started going right back up and I got less than I hoped for on the 1140/1150 roll down. I placed these trades sequentially.

I guess there are several ways the trade could be placed depending upon whether you have additional margin available and want to use it.

I thought people normally place these trades sequentially.

How would you have placed it?

Quote from andysmith:

rdemyan,
Just read your numbers, thanks for sharing. Yes, I think you must have been ITM and maybe vix/vol was higher than it is today... Did you execute
7/11/05 STC 1210/1225 bear call for $6.80
7/11/05 BTO 1215/1230 bear call for $2.75
as one condor or did you do this as two orders? Also, who is your broker? I use IB and TOS and have found that the user-friendliness of the TOS platform is worth its weight in gold when making adjustments under stress.
More...
 
I don't want to get too deep into it for several reasons. One being lack of time.

But I will say that I'm more of an opportunistic trader rather than systematic. Meaning I'm adding pos delta as we go lower and adding neg delta as the market moves higher. I'm always scaling and building positions and then shaving and modifing risk. Positon sizing for me is simply a function of the ratio of account size by how much risk I want to take.

Currently I'm about 35K net long delta(only about half of that is short prem). At some point if we move into the SPX 1200-1205 area I'll start lightening up and adding some neg delta. Then back and forth and back and forth.....

Not always right...but then who is. All you can do is trade what you see then adjust when you have to.

Good Luck


Quote from andysmith:

"...an old gray warrior that pulls money from the market for the rest of your life"
-- Dr. Z, makes a lot of sense. Can you share with us your portfolio breakdown and position sizing strategy?
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rdemyan,

I have found that placing as one trade is less risky for exactly the reason you outlined. The flipside of that is to close the offending spread, wait for the market to move further against you, and open a new spread for almost the same price -- I could have done this myself as I adjusted this week, but my appetite for thrills went to -100 so I did it as one trade.
 
I had to roll 1175/1165 down to 1165/1155. I compared the slippage using 2 trades VS 1 butterfly. I found that butterfly was cheaper.

In your case you can buy 'fly put 1140/1150/1160.

When I did the adjustment on TOS, it caused me $1.40. If I were to do it as separate trade, it would have caused me minimum $1.90.

One of the chat session on TOS mentioned that buying butterflies is easier to get filled at good price than doing this in two trades. The MM maker have less risk and more delta natural.

Quote from rdemyan:

Two orders. I use OX.

Yeah, maybe I haven't placing these orders correctly. When I adjusted yesterday, no sooner had I bought back my 1150/1160 bull put, then the market started going right back up and I got less than I hoped for on the 1140/1150 roll down. I placed these trades sequentially.

I guess there are several ways the trade could be placed depending upon whether you have additional margin available and want to use it.

I thought people normally place these trades sequentially.

How would you have placed it?
More...
 
In OX, they won't let you roll down your position using butterfly. However, you can call the trade desk and asked them to do butterfly for you. That's what I did for a spread I had with OX.

Quote from rdemyan:

Two orders. I use OX.

Yeah, maybe I haven't placing these orders correctly. When I adjusted yesterday, no sooner had I bought back my 1150/1160 bull put, then the market started going right back up and I got less than I hoped for on the 1140/1150 roll down. I placed these trades sequentially.
More...
 
Let's see if I understand this.

So for the butterfly, I would have placed the following (I'll use 1 contract)

BTO 1 SPX 1140
STO 2 SPX 1150
BTC 1 SPX 1160

Actually the 1150 would be STO 1 SPX 1150 and STC 1 SPX 1150. So is the problem with OX that they won't recognize the BTC or STC in these butterflies when input online?

This looks like a pretty good way to do it, esp. if I could trade this online. Will ToS allow subscribers to do this online for effectively adjusting a credit spread with one trade (I guess the assumption here is that the adjustment is equivalent to the spread, i.e. the middle strike price is the same as it is with 1150).

Coach, did you use this technique on your recent bull put spread adjustment and what are you thoughts on this.

I've been having more problems with OX. The software program keeps screwing up my margin maintenance (of course to my detriment) and I have to call them. To their credit they generally fix it pretty fast.


Quote from skanan:

In OX, they won't let you roll down your position using butterfly. However, you can call the trade desk and asked them to do butterfly for you. That's what I did for a spread I had with OX.
More...
 
I have not done the adjustments as a butterfly but I think that is a really good idea actually. I close out the spread and then open the new lower strike (puts in this case) spread and the interim does leave me open for a whipsaw potential. I will have to look into that next time I adjust (which better be a long ways off lol)

Phil

Quote from rdemyan:

Let's see if I understand this.

So for the butterfly, I would have placed the following (I'll use 1 contract)

BTO 1 SPX 1140
STO 2 SPX 1150
BTC 1 SPX 1160

Actually the 1150 would be STO 1 SPX 1150 and STC 1 SPX 1150. So is the problem with OX that they won't recognize the BTC or STC in these butterflies when input online?

This looks like a pretty good way to do it, esp. if I could trade this online. Will ToS allow subscribers to do this online for effectively adjusting a credit spread with one trade (I guess the assumption here is that the adjustment is equivalent to the spread, i.e. the middle strike price is the same as it is with 1150).

Coach, did you use this technique on your recent bull put spread adjustment and what are you thoughts on this.

I've been having more problems with OX. The software program keeps screwing up my margin maintenance (of course to my detriment) and I have to call them. To their credit they generally fix it pretty fast.
More...
 
Quote from andysmith:

A ballpark number that I've noticed with all the adjustments this month: it's about a $0.50 loss to roll down the put side by 5 points when the index is dangerously close to the short strike (around 5 points away).
More...

Under different IV, time to expiration, spread width, this can be substantially different...so not sure how useful this is as a guide for you.

Momoney.
 
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