SPX Credit Spread Trader

Hey Jet!!!!

With a statement like that, you now have to share your "adjustment to his style"... :) :cool: :D

Quote from JET_DRIVER:

Max just sells OTM puts with 30 dte. He as a discliplined risk control method and a respectable trackrecord. After all he has traded for over 20 years!

I trade both sides of the frontspread/backspread realm. I normally DO NOT sell naked puts. My preference is a diagonal put credit spread. I watched my mentor, JS, make many MILLIONS of dollars selling premium. I have made some adjustment to his style but basically trade his method.
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Okay you professionals that contribute to this thread, here's a question for you.

The Nov 1120 just got added today. I'm trying to place the following:

Nov SPX 1110/1120 bull put credit spread for $1.00

Here are the bid/asks for each leg:

1110: 2.75/3.40
1120: 0.00/0.00

I understand that the 1120 was just opened and no b/a yet. That's why I placed an unreasonably high credit amount of $1.00 to see if I could get a process started so that I could then adjust the amount. But nothing is happening.

Why doesn't the mere prescence of my order start to generate bid/asks on the 1120.
 
Greetings JET

Welcome.

If you don't mind.....why do you prefer the diagonal verses the straight vertical? I know that it eliminates your vega risk but are there other reasons? This would be more of ratio write to make that a credit ...yes? Do you ratio to vega neutral? If so then how do you maintain your credit. Sorry....I'm surely missing something simple here.

Also, when your front short strike expires do you roll into a vertical then? Or do you lift your long strike too and make another diagonal?

Thanks



Quote from JET_DRIVER:

[B My preference is a diagonal put credit spread. [/B]
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And to add another question, if you ratio the spreads to make a credit, isn't the margin requirement really high?

Quote from Dr. Zhivodka:

Greetings JET

Welcome.

If you don't mind.....why do you prefer the diagonal verses the straight vertical? I know that it eliminates your vega risk but are there other reasons? This would be more of ratio write to make that a credit ...yes? Do you ratio to vega neutral?

Also, when your front short strike expires do you roll into a vertical then? Or do you lift your long strike too and make another diagonal?

Thanks
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Quote from Maverick74:

Sure,

Depending on the type of trader you are, if you like to swing trade the tops and bottoms, you could sell ITM credit spreads. You can often take in 7 to 8 pt credits. Yes, 7 to 8 pts, not .70 to .80, in return for only 2 to 3 pts of risk. Much better risk to reward.

Of course you are trading hard deltas and need the index to move back up. But if you are decent at picking tops and bottoms, it's a much safer way then doing what a lot of people do which is selling naked puts or getting long the underlying outright. This allows you to make a bet with very limited risk, risk that you don't need to hedge, re-hedge, and hedge again. The upside is sweet. No greeks to worry about. And the credits are huge.

Keep in mind, this is strictly a directional bet. But it allows you to not have to worry about putting out fires when the shit hits the fan.
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In this case, just buying an ITM call would almost do the same trick.
 
Quote from Julius:

In this case, just buying an ITM call would almost do the same trick.
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No, you have to trade same strikes for synthetics. To complete the box, flip the strikes and change the puts to calls. In other words, selling the 100/90 put spread should be the same as buying the 90/100 call spread.
 
OX cancelled my order because there is no b/a on the 1120. They are calling down to the pit to request that the process get started (I'm vague because I don't really understand the nitty gritty of how that works.). No guarantees so they tell me.

Quote from rdemyan:

Okay you professionals that contribute to this thread, here's a question for you.

The Nov 1120 just got added today. I'm trying to place the following:

Nov SPX 1110/1120 bull put credit spread for $1.00

Here are the bid/asks for each leg:

1110: 2.75/3.40
1120: 0.00/0.00

I understand that the 1120 was just opened and no b/a yet. That's why I placed an unreasonably high credit amount of $1.00 to see if I could get a process started so that I could then adjust the amount. But nothing is happening.

Why doesn't the mere prescence of my order start to generate bid/asks on the 1120.
More...
 
Or you don't ratio write at all and your credits pile up in subsequent months on multiple rolls. Your long strike is 2 or 3 months out.

This is more likely.

I knew was missing something simple.



Quote from Dr. Zhivodka:

Greetings JET

Welcome.

If you don't mind.....why do you prefer the diagonal verses the straight vertical? I know that it eliminates your vega risk but are there other reasons? This would be more of ratio write to make that a credit ...yes? Do you ratio to vega neutral? If so then how do you maintain your credit. Sorry....I'm surely missing something simple here.

Also, when your front short strike expires do you roll into a vertical then? Or do you lift your long strike too and make another diagonal?

Thanks
More...
 
Quote from optioncoach:

And to add another question, if you ratio the spreads to make a credit, isn't the margin requirement really high?
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lol, I'm gone for 2 days and all hell breaks loose on this thread :D but we've seen this all before...yawn.

I know the question wasn't directed at me but I put on diagonals 1:1 due to the margin requirements you allude to but normally look to get it done for a very very very very small debit or scratch if I do it.

Obviously this intial position is long theta and vega which is nice.

If I end up rolling the short leg to the back month I find I get a better return on margin than If I had done a straight vertical. I normally look put on the diagonal about 40-50 days from back month exp.

Before this gets pounced on, anyone with half a brain will be aware of the risks involved in this strategy. Under most circumstances there is no statistical edge to it lol.

Momoney.
 
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