SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
I would add that another advantage is selling atm is better liquidity.
The "disadvantage" in selling atm is the increased likelihood in being wrong and therefore having to protect the position with the underlying. The "advantage"--not a real one, mind you--of otm is the high likelihood of being right. People like being right and hate taking or experiencing losses--hence, the appeal of the credit spread.
I just received a friendly pm from someone asking me what I do about getting whipsawed. I said that is simply the cost of doing business of selling atm.
I USEd to sell otm calls late in rallies. Nasty habit.
I do appreciate all the constructive criticizm from you more experienced option traders. I'm certainly not using a large portion of capitol on this particular strategy, and your comments are very fair. On other threads it has been pointed out there is no "perfect" type of option, and I'm certainly still learning other strategies. As I learn, hopefully, and as market conditions dictate I will have the flexibility and open mind to try other methods and strategies.
My thoughts exactly! I think the constructive criticism of this group is the best part. Anybody can throw out a real or potential trade and within a short time you get all sorts of feedback. I follow some other options boards on the net and this is by far the best.
With my 1240/1250 spread, I saw the market rally and wanted to sell some call spreads into it. I'm looking for the market to settle a bit now that the Bernanke appointment has been made and GDP numbers coming later in the week. Maybe I am being a little too aggressive, will have to watch and see. I'm still evaluating the put side, may a 1120/1130 or a 1125/1135 spread.
ryan
SPY is a standard and poor product that they own and mini-SPX is a CBOE product. It is just a competition thing really. Also, the SPY has some slippage due to the cost and lag of the tracking stock while the mini-SPX is simply the SPX divided by 10. The difference is probably too minor to matter. Bottom line it is just CBOE trying to keep its hold on index products and compete with the SPY.
Phil
Phil
XSP premiums at certain strikes are slightly lower than the same strike counterpart on SPY. For example 121 SPY ask is $0.30 more than XSP 121 ask. Looks like long hedges might be better on XSP but this is only the first day of trading....
This actually gives you some flexibility for NOV since you can either sell a lower strike call for a credit spread or if a bigger move is expected sell a higher strike call for more than $0.55 for a risk-free trade. Keep your options open either way.
phil
phil