Well is it the peak or the mid-point? Hard to imagine it can be both of the same cycle....
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
I will post another chart of SPX so we can analyze the most recent price action in light of the past time period. As I have said before we are still in the upward bullish channel and the overall trend is still higher, thus my focus only on bull put spreads.
Stay tuned...
Stay tuned...
Butter Fly. I like it.
Actually, I would suggest that the term pregnant fly is more commonly understood to be flies where the distance between the body and the wing is more than one strike as per Cottle.
It is called a pregnant fly because it has "baby" flies embedded in the position e.g.
ATM SPX "non-pregnant" Fly is:
1275/1280/1285
An example pregnant fly would be:
1270/1280/1290 (note that it is equidistant)
This fly has 4 baby flies embedded in it. As per Cottle, the easy way to calculate that is to square the number of strikes between the wing and body. In this case it is 2 squared and hence there are 4 baby flies embeded.
In case you were wondering, the 4 baby flies are:
1270/1275/1280
1275/1280/1285
1275/1280/1285
1280/1285/1290
Why is it important to be able to dissect your position this way? Well if you know that a butterfly has maximal value when ATM then you can decide to sell some of the flies embedded in the position when it makes sense to do so etc. if you feel like taking profits or taking money off the table.
Where you have a fly where the strikes are not equidistant, it might be referred to as a skip-strike fly amongst other names.
If you want to call that a pregnant fly too then you are free to do so but some people might get confused by the differing terminology. Like any industry, half the battle is understanding the lingo.
MoMoney.
Actually, I would suggest that the term pregnant fly is more commonly understood to be flies where the distance between the body and the wing is more than one strike as per Cottle.
It is called a pregnant fly because it has "baby" flies embedded in the position e.g.
ATM SPX "non-pregnant" Fly is:
1275/1280/1285
An example pregnant fly would be:
1270/1280/1290 (note that it is equidistant)
This fly has 4 baby flies embedded in it. As per Cottle, the easy way to calculate that is to square the number of strikes between the wing and body. In this case it is 2 squared and hence there are 4 baby flies embeded.
In case you were wondering, the 4 baby flies are:
1270/1275/1280
1275/1280/1285
1275/1280/1285
1280/1285/1290
Why is it important to be able to dissect your position this way? Well if you know that a butterfly has maximal value when ATM then you can decide to sell some of the flies embedded in the position when it makes sense to do so etc. if you feel like taking profits or taking money off the table.
Where you have a fly where the strikes are not equidistant, it might be referred to as a skip-strike fly amongst other names.
If you want to call that a pregnant fly too then you are free to do so but some people might get confused by the differing terminology. Like any industry, half the battle is understanding the lingo.
MoMoney.
Its a toughie Heather...on one hand your right it seems unreasonably high.. (the RUT).many ppl are saying it should not keep going up. Also I checked from Dec exp to Jan exp (5 weeks) it went up 21 pts...to 704...so the likelyhood of more than double that in a 4 week exp is probably slim. On the other hand there is always the "January effect" when sm cap stocks are supposed to outperform the overall market.
The probability (according to TOS) of 750 being in the money is abt 27%...a little high for my comfort zone but I wouldn't be ready to bail as yet. (your short is 750?) since we are toppy...if it were me I would wait until next Tues..day by day being prepared to bail.
The market is a bully and in the last two weeks of expiration there will be a couple of very hairy days. You can always roll to a bull call spread but given how how its gone up so much already I would hesitate to do that. The only thing I can say is making a plan then executing it at YOUR time and place is much preferable than to let it go until the market has you buy the (what we don't have
) good luck...
The probability (according to TOS) of 750 being in the money is abt 27%...a little high for my comfort zone but I wouldn't be ready to bail as yet. (your short is 750?) since we are toppy...if it were me I would wait until next Tues..day by day being prepared to bail.
The market is a bully and in the last two weeks of expiration there will be a couple of very hairy days. You can always roll to a bull call spread but given how how its gone up so much already I would hesitate to do that. The only thing I can say is making a plan then executing it at YOUR time and place is much preferable than to let it go until the market has you buy the (what we don't have
) good luck...
So I went to Cottle's web site and was looking at the book, looks interesting but I think I'll wait to hear some of your reviews first. Last thing I need is another dust collector. Anyway, browsing through the site I found something about cottles technical system. Anyone ever hear of this? It sounds kinda L. Ron Hubbard esque, but I figured I'd run this by the traderocrati out there to see what they think.
Non-commerical info below:
Diamonetrics⢠For The Novice Or Professional
This three hours of recorded (audio/visual) Diamonetrics.avi, the Diamonetrics.pdf Manual and the Diamonetric Grids.xls (pre-built for immediate chart overlay) will get you going right away if you already understand options strategies mentioned below.
Diamonetrics⢠has been my proprietary technical analysis tool and never really shared because it was rather difficult to explain how to build a proper Diamonetric Grid. But now the essential Diamonetric Grid comes pre-built, ready to copy and paste, to simply stretch, scrunch, and swivel into place capturing the market's essence. Diamonetrics ⢠is used, most efficiently, to determine profit opportunities based on forecasting probable trading ranges, at particular expiration dates.
I know of nothing better available for speculating with limited risk.... high probability short premium (time on your side) plays (butterflies, condors, calendar spreads, iron calendars, etc.) and hedges for stocks, equity indexes, financial futures, currencies, commodities and other underlying securities.
Non-commerical info below:
Diamonetrics⢠For The Novice Or Professional
This three hours of recorded (audio/visual) Diamonetrics.avi, the Diamonetrics.pdf Manual and the Diamonetric Grids.xls (pre-built for immediate chart overlay) will get you going right away if you already understand options strategies mentioned below.
Diamonetrics⢠has been my proprietary technical analysis tool and never really shared because it was rather difficult to explain how to build a proper Diamonetric Grid. But now the essential Diamonetric Grid comes pre-built, ready to copy and paste, to simply stretch, scrunch, and swivel into place capturing the market's essence. Diamonetrics ⢠is used, most efficiently, to determine profit opportunities based on forecasting probable trading ranges, at particular expiration dates.
I know of nothing better available for speculating with limited risk.... high probability short premium (time on your side) plays (butterflies, condors, calendar spreads, iron calendars, etc.) and hedges for stocks, equity indexes, financial futures, currencies, commodities and other underlying securities.
This is my first time posting to the forum after reading daily for about a month. I have been trading credit spreads for about six months and have had success so far. One of the more frustrating aspects is the terrible fills on the SPX. Today I was trying to sell a FEB 1325/1335 bear call spread and the bid/ask was .1 / .8. I was looking for a limit of .35. The order sat for several hours unfilled. What has been the experience of others in obtaining decent fills on the SPX? In my case, I was figuring a bid/ask spread of .7 and figuring that .25 for me and .45 for the market maker seemed fair. Are there any tricks others would be willing to pass on?
Thanks,
Glenn
Thanks,
Glenn
Hi Donna,
I was soooo busy at work. Back to the thread and pages to read.
I know my 585/595 could be in trouble. I am experimenting selling xeo otm below support and above resistance .20 delta or so on either side ......................
Looking at the xeo chart:
1) I can see it trading in a range 571-584 (looking at closes)
2) If it closes above 585, I will either close the spread or roll higher. Depending on time left to expr.
3) I also have a 570/565 bull put. So, the credit I got from this will cushion the cost of a roll up.
Do you have any suggestions? What is your analysis of xeo for Feb. expr.?
Thanks
mo...do you not have TWO 1275/1280/1285 's...why?tia