SPX Credit Spread Trader

If you are slowly increasing your size in line withy our margin than that is fine. What you should be weary of is having a nice string of wins and the ratcheting up your positions to a much bigger size. In other words you do not want to do 30 contracts a month and then make a jump to 110 because you have been having success. As you make returns, naturally the cash available for spreads increases so you slowly increase the contracts.

One idea is to deposit profits in t-bills or other investments and have access to a % of them and have them earn additional interest/profits while you continue to grow your spread positions.

Like I said, as long as your growth in position size is reasonable and you do not make a huge jump. When we win a lot, we tend to get greedy and move outside of our comfort level and risk management parameters. Just be mindful of that.

Phil


Quote from andysmith:

Phil,

I think you mentioned in a previous post that one should not get overly complacent/confident after a few months of success with credit spreads and should not increase the number of contracts.

However, as my account size grows, I'm slowly increasing the number of contracts to keep up with my growing account -- to take advantage of "the magic of compounding"... are you suggesting this is not good?
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I thoroughly enjoy this thread. Thanks to each and every one of you for your thoughts. Now I will share some of mine. This was just my plan. Doesn't make me right, just sharing.

I had a 1170/1155 Put spread. I did NOT roll down. Everyone else here did. That's fine. After doing condors for the last 3 years, and screwing everything wrong I could imagine. I've learned one thing. DFWI-don't fiddle with it.

My plan-give support time to work. I've got to admit, at 1168 I had my roll down qued and my finger on the send button.

Many here will disagree. YES, I took significant risk. But it was within my plan. I felt it right, 1170 support still had not broken (But boy was it bent!). I anticipated at least a pullback up. Given the first chance, I will close out this position this week. It is now profitable on the put side again.

Having said all that. I also had the 545/535 put spread on OEX. I rolled that down once 545 broke and started a bounce back. My rule on OEX was a breach of the strike. I chose a poor roll, and went to 535/525. I should only have rolled 5 points.

My point for newbies is you have to give time for support/resistance to work. Each person here has a different set of rules and risk tolerance. This time, my rules appear to have worked. (Please don't flame me if you disagree, but I do respect those with opposite opinions). I chose to roll part of my portfolio and not other parts. That is I rolled a percentage of my portfolio, I would have rolled another portion (probably all the remainder) at my next trigger point.
 
Gatorplease,

Thanks for sharing how you handled last week. I am quite new to this but I pay attention to support/resistance. I saw support at 1210, at 1200 and again about 1190. the index just kind of dove through all those levels. Where did you get your conviction that 1170 was a support level that would hold? For me it is just tough to take a stand when the underlying is dropping that far that fast.

I thoroughly enjoy this thread. Thanks to each and every one of you for your thoughts. Now I will share some of mine. This was just my plan. Doesn't make me right, just sharing.

I had a 1170/1155 Put spread. I did NOT roll down. Everyone else here did. That's fine. After doing condors for the last 3 years, and screwing everything wrong I could imagine. I've learned one thing. DFWI-don't fiddle with it.

My plan-give support time to work. I've got to admit, at 1168 I had my roll down qued and my finger on the send button.

Many here will disagree. YES, I took significant risk. But it was within my plan. I felt it right, 1170 support still had not broken (But boy was it bent!). I anticipated at least a pullback up. Given the first chance, I will close out this position this week. It is now profitable on the put side again.

Having said all that. I also had the 545/535 put spread on OEX. I rolled that down once 545 broke and started a bounce back. My rule on OEX was a breach of the strike. I chose a poor roll, and went to 535/525. I should only have rolled 5 points.

My point for newbies is you have to give time for support/resistance to work. Each person here has a different set of rules and risk tolerance. This time, my rules appear to have worked. (Please don't flame me if you disagree, but I do respect those with opposite opinions). I chose to roll part of my portfolio and not other parts. That is I rolled a percentage of my portfolio, I would have rolled another portion (probably all the remainder) at my next trigger point. [/QUOTE]
 
Quote from gatorplease:

I thoroughly enjoy this thread. Thanks to each and every one of you for your thoughts. Now I will share some of mine. This was just my plan. Doesn't make me right, just sharing.

I had a 1170/1155 Put spread. I did NOT roll down. Everyone else here did. That's fine. After doing condors for the last 3 years, and screwing everything wrong I could imagine. I've learned one thing. DFWI-don't fiddle with it.

My plan-give support time to work. I've got to admit, at 1168 I had my roll down qued and my finger on the send button.

Many here will disagree. YES, I took significant risk. But it was within my plan. I felt it right, 1170 support still had not broken (But boy was it bent!). I anticipated at least a pullback up. Given the first chance, I will close out this position this week. It is now profitable on the put side again.

Having said all that. I also had the 545/535 put spread on OEX. I rolled that down once 545 broke and started a bounce back. My rule on OEX was a breach of the strike. I chose a poor roll, and went to 535/525. I should only have rolled 5 points.

My point for newbies is you have to give time for support/resistance to work. Each person here has a different set of rules and risk tolerance. This time, my rules appear to have worked. (Please don't flame me if you disagree, but I do respect those with opposite opinions). I chose to roll part of my portfolio and not other parts. That is I rolled a percentage of my portfolio, I would have rolled another portion (probably all the remainder) at my next trigger point.
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Good Post! I agree alot has to do with experience and market feel. I use a combination of tech analysis (ie; Fib #'s, macd, rsi, put/call ratio, etc) and experience, market feel (if there is such a thing,lol). My feelings are that this market sold off farther and faster then it 'should' and was overdone on the short side. That conclusion gave me some comfort even though my short puts were in the money. If it would have been a more gradual selloff I would have been way more concerned. I could be dead wrong in my analysis and am willing to pay the price if I am...time will tell. Also, I sold some 1215/1225 calls for $.20 on Friday at the mkt close, happy trading. :)
 
Quote from Hart9000:



<<Thanks for sharing how you handled last week. I am quite new to this but I pay attention to support/resistance. I saw support at 1210, at 1200 and again about 1190. the index just kind of dove through all those levels. Where did you get your conviction that 1170 was a support level that would hold? For me it is just tough to take a stand when the underlying is dropping that far that fast.>>

From my analysis, 1170 was much stronger support than others. Furthermore, the market had simply moved too far, too fast. Like an overstretched rubber band, it needed to bounce back to relieve some pressure. This is also why I chose the 1170 strike price for my short put, as opposed to many here who had chosen 1175. I did not see the support at 1175. They were counting on support in the 1190s to hold.

In hindsight, I should have chosen 1165 as my short put, since that would have been below my support trendline. But at the time, I didn't see the premium there that I wanted. That tradeoff nearly cost me dearly.

I thoroughly respect those that rolled down. It was good money management, for their plan. My plan was established with strong support at 1170, and that held. I stood behind my plan. :eek:
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Gater I didn't close mine either but also had 1170, i think most that rolled had 1175, and that made sense to me whereas (although) 1170 was briefly breached I think you did have the feel that we were far too oversold to actually end up there. Phil made a good point earlier that your "plan" does need to have some flexibility, but as you say ofter we end up over reacting thus over trading...and my reasoning was as long as I had no conviction one way or the other...do nothing.

Rather than close (OCT) to open a Nov put spread I'm going to free up some BP and open Nov tomorrow while we are still in the over-sold range..looking for 1150/1135
 
I do not know why you fear a lashback for not rolling at 1170. I rolled, but that was based on my risk management plan and my market analysis. Others rolled based on their own plans as well. You have to develop your own plan otherwise you will not have the conviction to follow it. It has to come from you otherwise you will not have the confidence or belief based on your experience and skill to follow through. I rolled to 1165 and did not roll again when the market was flirting with 1170 because I also had feelings the market got over extended too far too fast and we only had 4 or 5 trading days left.

I personally never want any short strike to be ITM at any time so I roll. I also try and place strikes outside of support or resistance lines so I am more likely to roll once the index approaches a short strike because a previous support or resistance line was broken. Now new support and resistance can develop but that is why I have to stay flexible. Since based on my experience, adjustments will be 1 or 2 times a year, I am more willing to make the adjustment for more room than let it dip ITM a bit and wait for support to or resistance to kick in. The one time it does not I can be burned. But that is just my approach, not necessarily the right or best one.

So there are some generalities under risk management which are 100% correct, such as working to limit your losses, but the approach and methods are certainly open for interpretation by each individual trader based on their own experiene, skill, capital, emotions and analysis.

Phil



Quote from gatorplease:

I thoroughly enjoy this thread. Thanks to each and every one of you for your thoughts. Now I will share some of mine. This was just my plan. Doesn't make me right, just sharing.

I had a 1170/1155 Put spread. I did NOT roll down. Everyone else here did. That's fine. After doing condors for the last 3 years, and screwing everything wrong I could imagine. I've learned one thing. DFWI-don't fiddle with it.

My plan-give support time to work. I've got to admit, at 1168 I had my roll down qued and my finger on the send button.

Many here will disagree. YES, I took significant risk. But it was within my plan. I felt it right, 1170 support still had not broken (But boy was it bent!). I anticipated at least a pullback up. Given the first chance, I will close out this position this week. It is now profitable on the put side again.

Having said all that. I also had the 545/535 put spread on OEX. I rolled that down once 545 broke and started a bounce back. My rule on OEX was a breach of the strike. I chose a poor roll, and went to 535/525. I should only have rolled 5 points.

My point for newbies is you have to give time for support/resistance to work. Each person here has a different set of rules and risk tolerance. This time, my rules appear to have worked. (Please don't flame me if you disagree, but I do respect those with opposite opinions). I chose to roll part of my portfolio and not other parts. That is I rolled a percentage of my portfolio, I would have rolled another portion (probably all the remainder) at my next trigger point.
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Thanks for the words! It has gotten quite long and detailed so I admire anyone who goes back and reads most of it lol.

Phil


Quote from Samson77:

Nice journal

I just finished reading through some of it.

looks like one of the few ET gems...:)
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CLosed out the OEX butterfly I put on for a partial hedge (530/540/550) for a small loss (-$450). I see some sideways/strength in the market for the next 4 trading days so I do not want to take losses on my partial hedges. For now I will let theta do its job.

Phil
 
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