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Vertical Spreads for Aggressive Growth
- Thread starter Cache Landing
- Start date
Today's Action
STO 3 SPX JUN 1310/1315 c @ 1.00
BTO 1 SPX JUN 1240 p @ 2.35
STO 2 ATI JUN 65/70 c @ 2.35
Year to Date P/L
Account Value: $12,807.00
YTD Gross P/L: 3,290.00
YTD Commiss: 483.00
YTD Net P/L: 2,807.00
YTD % P/L: 28.1%
Decided to open something of a R/R on SPX at the close today. I'm expecting some movement down from here over the next few days. I'm not expecting to hold this position through CPI/beige book.
I'm not very familiar with ATI but I thought I would take a chance on them.
STO 3 SPX JUN 1310/1315 c @ 1.00
BTO 1 SPX JUN 1240 p @ 2.35
STO 2 ATI JUN 65/70 c @ 2.35
Year to Date P/L
Account Value: $12,807.00
YTD Gross P/L: 3,290.00
YTD Commiss: 483.00
YTD Net P/L: 2,807.00
YTD % P/L: 28.1%
Decided to open something of a R/R on SPX at the close today. I'm expecting some movement down from here over the next few days. I'm not expecting to hold this position through CPI/beige book.
I'm not very familiar with ATI but I thought I would take a chance on them.
What do you mean by theoretical price?
Quote from Cache Landing:
For the 1320/1325 I wanted 1.70 when mid was 1.80 and the theoretical pricing was @ almost 1.85. Didn't intend to hold that past June 14.
For the 1340/1345 I wanted 0.90 with mid at 1.00. I figured I wouldn't get filled on that one because the mid was inflated and theoretical price was 0.90. I wasn't in a hurry on that one as I intended to hold till within 2 weeks of expiry.
Quote from cnms2:
What do you mean by theoretical price?
The price of the vertical after making the required assumptions and inputing the necessary data in models such as B/S. The quoted mid price is many times very unreliable. The theoretical price gives a better idea of what an options' (spread's) estimated value might be.
As for my bearish outlook for SPX. I'm basing my opinion on uncertainty surrounding the Fed decisions and the varying data leading up to it. When it comes down to it, the data released so far is fairly inconcequential. The real market mover is going to be the CPI report. Until then I'm forecasting a whipsaw environment.
I see. We have different views on those.
For me, the option's mid point between best bid and best ask, plugged into a model, gives that option's implied volatility. So my view is that there's no theoretical price.
Regarding SPX's outlook I didn't do yet my homework for next week, and indices are more difficult to analyze, but I expect the CPI or any other news to manifest only like a jitter on the direction indicated by technicals. But this is because I rely on TA to make my directional opinion for my time frame of about one week.
For me, the option's mid point between best bid and best ask, plugged into a model, gives that option's implied volatility. So my view is that there's no theoretical price.
Regarding SPX's outlook I didn't do yet my homework for next week, and indices are more difficult to analyze, but I expect the CPI or any other news to manifest only like a jitter on the direction indicated by technicals. But this is because I rely on TA to make my directional opinion for my time frame of about one week.
Quote from Cache Landing:
The price of the vertical after making the required assumptions and imputing the necessary data in models such as B/S. The quoted mid price is many times very unreliable. The theoretical price gives a better idea of what an options' (spread's) estimated value might be.
As for my bearish outlook for SPX. I'm basing my opinion on uncertainty surrounding the Fed decisions and the varying data leading up to it. When it comes down to it, the data released so far is fairly inconcequential. The real market mover is going to be the CPI report. Until then I'm forecasting a whipsaw environment.
Quote from cnms2:
I see. We have different views on those.
For me, the option's mid point between best bid and best ask, plugged into a model, gives that option's implied volatility. So my view is that there's no theoretical price.
Regarding SPX's outlook I didn't do yet my homework for next week, and indices are more difficult to analyze, but I expect the CPI or any other news to manifest only like a jitter on the direction indicated by technicals. But this is because I rely on TA to make my directional opinion for my time frame of about one week.
For most equity option the "theoretical price is pretty much always the same as the mid. This makes sense because it doesn'treally matter which way you solve the equation, you will come up with the same number.
The SPX is a different story. The b/a spread is so wide and fluctuates so quickly that you really need to have an idea about IV first and figure out the theoretical value of the otions from that. Many times the mid really doesn't tell you much about what you might recieve/pay at any given strike.