This is a Vertical Credit Spread I am about to trade..

[Con1991]

Ok thanks, interesting.
Delta is very very low, do you intend to profit mainly by trading around mid price?

How did it go in the past?
Did the underlying move substantially for you to exit with a gain?

Yes, I profit mainly by trading in the range of the mid price. I have done quite well from this strategy, and the more contracts, the more profit.

 

[cesfx]

Yes, I profit mainly by trading in the range of the mid price. I have done quite well from this strategy, and the more contracts, the more profit.

Thanks for sharing, I am fan of verticals and will definitely take a look at this.

 

[FSU]

A couple of things,
There is still a risk of assignment, however since NDX is cash-settled, this would only be at expiration.

Since this is cash settled there is no assignment risk as expiration. All cash settled, everything in the money will be exercised/assigned.

It is very unlikely you will be filled at these prices. You are trying to sell a 100 point vertical for 100. If a MM was to take the other side, they would lock in a guaranteed loss. The spread can't be worth more than 100 at expiration, so they will lose commissions, plus they have the potential to lose a lot more.

 

[Con1991]

A couple of things,
There is still a risk of assignment, however since NDX is cash-settled, this would only be at expiration.

Since this is cash settled there is no assignment risk as expiration. All cash settled, everything in the money will be exercised/assigned.

It is very unlikely you will be filled at these prices. You are trying to sell a 100 point vertical for 100. If a MM was to take the other side, they would lock in a guaranteed loss. The spread can't be worth more than 100 at expiration, so they will lose commissions, plus they have the potential to lose a lot more.

Well yes, I see your point. But every now and then, anomalies occur in options trading. And I have actually been filled in these type of spreads before. Legging in also works, however there is extra risk in that.

 

[earth_imperator]

Hmm. I think this spread trade looks much like an arbitrage, so I doubt it will ever get filled.
--> https://optioncreator.com/stdvwo5

 

[Con1991]

Hmm. I think this spread trade looks much like an arbitrage, so I doubt it will ever get filled.

I have had these filled in the past..

 

[earth_imperator]

I have had these filled in the past..

Did you trade it as a spread right from the beginning, or did you rather open the 2nd leg sometime later?

 

[Con1991]

Did you trade it as a spread right from the beginning, or did you rather open the 2nd leg sometime later?

I entered the trades as a single spread order..

 

[earth_imperator]

I entered the trades as a single spread order..

Cool! Thx for sharing your idea and experience. Very useful. Wish you luck.

 

[Damanuelman]

Okay so you want to sell an in the money bear call spread. At 10300 and 10400 for $100? That’s the exact width of the strikes, it says the cost will be ~$100 with a almost $10,000 margin requirement so that’s ummm. About a 1% return on capital. If you can find a buyer which doesn’t make much sense because the option is priced exactly as it should, I’m not sure who would exactly buy this as they are always paying a $100 premium. No chance of it being worth more and they always pay the premium. I think your missing something here.