SPX Credit Spread Trader

Quote from optioncoach:

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
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Most of the adjustments I've seen you make aren't compatible with butterflies for adjusting due to the width of your spreads - they end up overlapping. I personally use 5 point credit spreads for this very reason amongst others (we won't go over the many pro's and con's again)

I've always got much better fills with butterflies but you have to keep an eye on price of them e.g. rolling down call spreads, if you leave it too late, you won't get any credit for selling the appropriate butterfly and you end up having to sell two butterflies one after the other to roll down twice. This can cost you a lot of commissions :mad: but I still prefer it to closing and then opening lower - i just make sure I keep an eye on the prices and lock in the credits incrementally.

The same goes for rolling out - buying butterflies. If you're lucky with the IV skew you can actually buy butterflies for zip sometimes and get an adjustment for free :)

Momoney.
 
I had the same issues about 1yr ago. You need to have them turn a option on in your account. It's called "Condor Logic" and let's their system see your positions as true condors. There has been no ill effects once they did this. You can request it over the phone or through live chat, but I find the live chat takes 3 times as long to get something done as the phone.

sd

Quote from rdemyan:


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. [/B]
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Only if I want to adjust a 10point spread down 10 points. However if I want to roll it down 5 points, the butterfly works. SO I could use the butterfly to adjust my 10 point spreads down 5 points if I want. Will not work on 15-point spreads I think.

Phil


Quote from momoneythansens:

Most of the adjustments I've seen you make aren't compatible with butterflies for adjusting due to the width of your spreads - they end up overlapping. I personally use 5 point credit spreads for this very reason amongst others (we won't go over the many pro's and con's again)

I've always got much better fills with butterflies but you have to keep an eye on price of them e.g. rolling down call spreads, if you leave it too late, you won't get any credit for selling the appropriate butterfly and you end up having to sell two butterflies one after the other to roll down twice. This can cost you a lot of commissions :mad: but I still prefer it to closing and then opening lower - i just make sure I keep an eye on the prices and lock in the credits incrementally.

The same goes for rolling out - buying butterflies. If you're lucky with the IV skew you can actually buy butterflies for zip sometimes and get an adjustment for free :)

Momoney.
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I don't understand. Why can't one use a butterfly to adjust, in my example, the 1150/1160 down to 1140/1150?


Quote from optioncoach:

Only if I want to adjust a 10point spread down 10 points. However if I want to roll it down 5 points, the butterfly works. SO I could use the butterfly to adjust my 10 point spreads down 5 points if I want. Will not work on 15-point spreads I think.

Phil
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Quote from rdemyan:

I don't understand. Why can't one use a butterfly to adjust, in my example, the 1150/1160 down to 1140/1150?
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You can! but you can ONLY adjust by the width of your spread e.g. 5 point spreads can be adjusted by 5 points by buying or selling butterflies. 10 point spreads can be adjusted by 10 points (as in your example) and 15 point spreads can be adjust by 15 points....but! you might not want to adjust that much in one go - that was my point about the wider spreads but I think it got lost in my crap explanation.

Of course, you can use unbalanced CONDORS (not iron condors) to achieve EXACTLY what you want but your brain has to be in full gear...lol and you might not get as good a fill.

Momoney.
 
FYI, if you are rolling down more than the put spread width, you are buying a condor, not a butterfly:

BTO 1 SPX 1130
STO 1 SPX 1140
STO 1 SPX 1150
BTC 1 SPX 1160

On the other hand, if you are rolling up your put spread, you are *selling* put condors/flys, not buying. Same for the call side.

I think you should have this down pat, otherwise you won't be able to use it during crunch time...
 
Quote from optioncoach:

Only if I want to adjust a 10point spread down 10 points. However if I want to roll it down 5 points, the butterfly works. SO I could use the butterfly to adjust my 10 point spreads down 5 points if I want. Will not work on 15-point spreads I think.

Phil
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:confused: lol, not sure about your logic there but then I have an IQ of about 3 and you've written a book so I'll assume you're right. Good weekend to ya.

Momoney.
 
"Only if I want to adjust a 10point spread down 10 points. However if I want to roll it down 5 points, the butterfly works. SO I could use the butterfly to adjust my 10 point spreads down 5 points if I want. Will not work on 15-point spreads I think."
-- Phil, rolling a 10-point spread, 10 points down is the only case where it's a fly. Rolling a 10-point spread down by 5 or 15 or 20 or... points is a condor (straight put condor where all strikes are puts).

All my rolls are like this and TOS makes it so easy. Sometimes it's less expensive because don't pay the full b/a spread twice.
 
"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."
-- It helped me tremendously. On Wed night I knew what I was looking at to roll on Thurs. On Thurs night I knew what I was looking at to roll on Fri....
 
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