Stock Credit Spread Trades

Quote from cszulc:

Mainly because I do not like picking a direction.

Sometimes I'll do deep ITM credit put spreads on the SPX or RUT, but with these volatile markets they must be really ITM to be safe, making the reward not as worth the risk.
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You mean OTM not ITM, don't you!? A short ITM put spread is "very" directional!
 
I think you're thinking of ITM CALL credit spreads.

For example, I sell the 1000/1020 (buying 1000 put/selling 1020) put spread on the SPX for $15, and take in the $15 credit but can lose $1985 if SPX goes below 1020.
 
great idea to post this journal. i too would like to know how you pick your strikes - is there a % range away from strike that you like the current underlying price to be? are you using probabilites to assess your chances of being within strikes?

i have just begun trading spreads, and individual stocks make me a bit nervous becuase of the recent huge volatility in the narkets. but the yields are certianly better. one other thing - does it make you nervous to be in this trade until may? in my research i have found that most spread traders will only go out one month or less. i know it is a risk/reward thing, because a 1.20 spread certainly wouldn't have been avail for april.

thanks for posting your progress.
 
Mainly choosing the strikes to have the underlying in the middle and pretty much the range of the past 4-8 weeks. Short butterflies are good for stocks that might move the 2.5 point range, which is what I did on MSFT for that nice $1.06 credit.

Spreads can be bad when you have a huge one month loss, which is why I spread my margin across different indices and stocks in case one really moves too much.
 
Quote from cszulc:

I think you're thinking of ITM CALL credit spreads.

For example, I sell the 1000/1020 (buying 1000 put/selling 1020) put spread on the SPX for $15, and take in the $15 credit but can lose $1985 if SPX goes below 1020.
More...

i'm missing something:confused: isn't 1000/1020 deep otm.??
 
Nope, that is an OTM put spread, exactly what I am looking to do. Something that produces a credit that probably won't get exercised so I can get keep the credit from selling options premium.
 
In your DIA IC, you mentioned that you try to have the current price as the midpoint between your bull put and bear call spreads. But your short 131 call is much closer and higher probability of loss than your relatively safer short 109 put. Is it because you feel that there isn't much upside in the next 3 weeks? Or is it that you must take more risk on the upside because the premiums are that much smaller?

Also, any particular reason you didn't leg in to this IC?
 
On the DIA, I don't see much upside. On my charts, I see resistance up at 12766 that we tried to break 2 times and just started heading towards there earlier this week (although today broke that pattern).

Sometimes I'll leg in, sometimes not, depends on how volatile it is. Monday and Tuesday weren't that volatile so I just went in on both sides, 2 legs, not 4.
 
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