SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
FYI,
People here in the Northern states, (Michigan), are receiving their natural gas bills.
It's the talk of the town.... most bills are 2.5 to 3.5 times what they were the previous month. For example: our cottage we don't live in, just visit, last month $56, this month $181. Our house, last month $120, this month $399.97
It will be interesting as the month of January continues....
I only comment on this as other bills (X-mas) and continued heat bills, along with Fed rates, and slowing housing.... Hmmmm.... what's ahead?
Murray
People here in the Northern states, (Michigan), are receiving their natural gas bills.
It's the talk of the town.... most bills are 2.5 to 3.5 times what they were the previous month. For example: our cottage we don't live in, just visit, last month $56, this month $181. Our house, last month $120, this month $399.97
It will be interesting as the month of January continues....
I only comment on this as other bills (X-mas) and continued heat bills, along with Fed rates, and slowing housing.... Hmmmm.... what's ahead?
Murray
Although support is holding, one can also argue that the market is topping out from its OCT rally. I still feel safer with deeper OTM puts than calls for now. If the support is broken I would still not expect the market to break down to 1200 without some severe catalyst. Even so, when I look to FEB spreads on the put side, I will still want to be as far below 1200 as I can be and still get a 3% return 
3%??! You really are starting the year conservatively. You're down even lower than I typically am (4 to 5% on margin per spread). That would currently be in the 1140/1150 range on the bull put.
Quote from optioncoach:
Although support is holding, one can also argue that the market is topping out from its OCT rally. I still feel safer with deeper OTM puts than calls for now. If the support is broken I would still not expect the market to break down to 1200 without some severe catalyst. Even so, when I look to FEB spreads on the put side, I will still want to be as far below 1200 as I can be and still get a 3% return
Nothing wrong with 3% a month for the first few months of the year . Gets you off to a nice start. Honestly I would be extremely happy with 3% a month the whole year with no losses .
. Gets you off to a nice start. Honestly I would be extremely happy with 3% a month the whole year with no losses .Yeah, that's true. 3% a month for 12 months would be 36%. I would definately be happy with that.
So, that begs the question, why not stick with 3%? But I guess in the end, for us, it all boils down to the range the SPX traverses during an expiration cycle and whether we're outside that range on our spreads or ICs. Lower premium generally means further OTM, but the ultimate question is: will it be enough?
Still it's an interesting question when you consider, Coach, that you're return was 20 to 25% doing slightly more risky spreads.
So, that begs the question, why not stick with 3%? But I guess in the end, for us, it all boils down to the range the SPX traverses during an expiration cycle and whether we're outside that range on our spreads or ICs. Lower premium generally means further OTM, but the ultimate question is: will it be enough?
Still it's an interesting question when you consider, Coach, that you're return was 20 to 25% doing slightly more risky spreads.
Quote from optioncoach:
Nothing wrong with 3% a month for the first few months of the year
Well we have to put my returns into perspective for the year. First, remember that I made no trades in Jan, Feb and March so I lost a potential extra 10% of returns. Second, I had to make adjustments in OCT and NOV which ate into the profits a bit, although I still made money (thanks to partial hedges). So with both those factors, I think the 23% was right in line more or less.
3% for 12 months would be nice but the odds are I will make 1 or 2 adjustments in a year which affect profitability. I expect to not miss any months in 2006 so I am looking for higher returns.
But even for Jan I only started with $120K margin which is less than the $200 - $250K average from last year so I am walking into the New Year.
Remember my advice, start the year off slow when doing these credit spreads, do not work off any positive or negative returns from last year. Clean your slate and clear your mind and put some "easy" trades into the basket to get a nice flow for the first quarter. Mental preparation is very important and this is just my advice on how to get your mind in a great place to start off the year.
3% for 12 months would be nice but the odds are I will make 1 or 2 adjustments in a year which affect profitability. I expect to not miss any months in 2006 so I am looking for higher returns.
But even for Jan I only started with $120K margin which is less than the $200 - $250K average from last year so I am walking into the New Year.
Remember my advice, start the year off slow when doing these credit spreads, do not work off any positive or negative returns from last year. Clean your slate and clear your mind and put some "easy" trades into the basket to get a nice flow for the first quarter. Mental preparation is very important and this is just my advice on how to get your mind in a great place to start off the year.
Would that be 3% total for the month or potentially 3% on each side of a IC ?
Quote from optioncoach:
Nothing wrong with 3% a month for the first few months of the year
Well I have only been looking at put credit spreads for the first 2 months or so, therefore it was 3% total. If you add the call side for an IC then the returns would be much bigger of course. But for now I still am only looking at puts for JAN (currnet position at 1165/1175) and for FEB (looking at 1150s or 1160s).