SPX Credit Spread Trader

A better way to play it perhaps is to do the OTM put spreads and use a part of the credit to perhaps go long call spreads OTM. This way you make money if the market goes up, sideways, and down up until the short strike. I think if you use the put spread credit to pay for the call spread debit then you lose money everyway except up and that is a narrower profit zone.

So maybe if you do 10 put credit spreads, you do 2 debit spreads (just pulling this out of air but for illustrative purposes). Now you make even more money up and still make money sideways and down until the short strike.

Phil




Quote from Hart9000:

Of course you are right about that coach. Just rounding errors. :p
More...
 
Quote from optioncoach:

A better way to play it perhaps is to do the OTM put spreads and use a part of the credit to perhaps go long call spreads OTM. This way you make money if the market goes up, sideways, and down up until the short strike. I think if you use the put spread credit to pay for the call spread debit then you lose money everyway except up and that is a narrower profit zone.

So maybe if you do 10 put credit spreads, you do 2 debit spreads (just pulling this out of air but for illustrative purposes). Now you make even more money up and still make money sideways and down until the short strike.

Phil
More...
Coach,

I can see many ways of playing this depending on what the market does. At this point with the SPX sort of rangebound in the short term and it becoming Nov, I am not comfortable putting large amts of margin at risk.

Once the market shows its hand there will be many possibilities. If it starts moving up strongly from here I could sell call spreads out past my long spread. I could also buy put spreads if the strikes are reasonable and the market feels overextended and due for correction.

If it starts moving down strongly from here I can sell low strike put spreads to capture that premium.

If it goes nowhere in the next two weeks I will look at committing myself if some reasonable credits are still available.

I like being positioned in the market with the long call spread to take advantage of a move up because that is my market bias at this time. However I still have my margin powder dry and available for other opportunities.
 
I was able to calm my emotions yesterday and not force any trades. The longer my order went unfilled the more anxious I was feeling about "missing out". I realized my emotions were getting in the way as they were trying to force me into trading at higher strikes without looking at the big picture to see if that made sense. I quickly realized what I was doing and cancelled my trades and called it a day.

Now today with a clearer head I will look at several strikes and maybe see how tight fisted the market makers are today.

ryan
 
Coach,

How does one use the volatility analysis charts in TOS?

If you are looking to buy OTM Dec. xeo calls, would one pick the strike(s) at the lowest volatility level? (between 580 and 590).



Thanks
 
I don't believe the market is ready to make any up move now. The short term RSI and Stochastic are way overbought on NDX and SPX and we need these two for up move.

I am even trying to buy the Put on SPX (short trade). We should see a last wave down before substantial up move( MHO). I am in a wait and see mode. The last two weeks should be interesting.

Anything I can find for NDX 1665/1675, I will take it.

I will wait for the last move down for my Put Spreads. It could be next week.

MHO
 
Was just thinking about something...

I sold a Nov 1240/1250 call spread on 10/12 for Nov expiry. At the time, the SPX was around 1185. I received 1.10 for it. I was able to buy it out yesterday for .6 even though the SPX had risen to around 1198.

got me thinking... do spreads start to tighten more at arund 30 days to exp? Would this be a good strategy in general--sell the call spreads at around 45 days--- it seems like it might give more leeway if the market does move against you.

Thanks for your thoughts/opiniions.

BTW, Coach is right-- the best time to learn is when you do something right (or atleast haven't lost money). Right now, I'm thinking "that's nice, I got out w/ some profit even though the market moved against me". But, now i want to learn more about what happened so that I try and be as fortunate in the future. If i'd closed out w/ a loss I probaby wouldn't be as receptive right now.:)
 
I have not used that ToS tool too much. If you are buying OTM calls expecting an upward move, I think you want to be more concerned with the strike selection and where you expect the market to be by expiration. If you chose the lowest vol, then you may simply be buying the call with the least liklihood of expiring ITM since XEO calls have a negative skew without taking the index itself into account.

So it would be a combination of analysis of the index and potential moves by DEC expiration, volatility, cost of the calls and how far OTM you are willing to go.

Phil

Quote from chrdso:

Coach,

How does one use the volatility analysis charts in TOS?

If you are looking to buy OTM Dec. xeo calls, would one pick the strike(s) at the lowest volatility level? (between 580 and 590).



Thanks
More...
 
The MM's were VERY stingy today! I placed a put spread order at .10 under the mid. Soon after that the mid went up another .10 or so and I still didn't get filled! I cancelled and upped my limit but chasing the market didn't get me anywhere. Try, try again I guess!

ryan
 
When went to CBOE.com website to see how the settlement of NDX options work, I got the followng:

Settlement of Option Exercise:
"The exercise-settlement value, NDS, is calculated using the opening price, as determined by the Nasdaq Stock Market..."

What does NDS mean?

Thanks.
 
NDX is pretty wild. It's a heart attack index. If you can't handle the risk and volatility, don't even try it.

You can make fast money though if you are on the right side of the market.


Quote from daytrader85:

When went to CBOE.com website to see how the settlement of NDX options work, I got the followng:

Settlement of Option Exercise:
"The exercise-settlement value, NDS, is calculated using the opening price, as determined by the Nasdaq Stock Market..."

What does NDS mean?

Thanks.
More...
 
You must log in or register to reply here.
Back
Top