Vertical Spreads for Aggressive Growth
- Thread starter Cache Landing
- Start date
Quote from Aardvark:
Funny...I'm LEAVING CO for a vac in San Diego tomorrow...unfortunately taking the laptop with me
I'm taking the laptop with me too. I will have dial-up access next week at the condo but will be in the middle of nowhere the following week in a cabin with no cell phone, land line or anything (that will be nice).
cache,
i will respond to your post here instead. Perhaps we can get a nice discussion going on increasing IV environment in light of trading verticals.I'd like to hear your thoughts on the subject.
I agree with your point about selling premium in low vol environment. What i am talking about is somewhat different though and perhaps i didnt express it clearly before. Yes, i'd rather sell spreads in high vols than low vols but i am trying to avoid opening the position at low vols and closing it at higher vols relative to when it was opened. I'd want the vols to stay the same or decrease during the theta decay and not increase as that would put additional pressure on my adjustment/exit. The wider the spread the bigger the pressure as you won't get to enjoy the gains from the +gamma strike before the -gamma strike overpowers you. When you have a consistently increasing IV environment, chances are you will open at low vols and close at higher relative vols. That's all i am saying. Comments?
There isn't anything that you are saying that I disagree with. You're right, it is likely that vols will continue up gradually from here, mostly because we will probably be in a steady market decline for the next couple years. This increase in vols isn't unmanageable, but you're right, closing at higher vols than you opened at is less desirable.
I also agree regarding wider spreads. The benefit is negligable and it could be argued that the costs significantly outweigh the rewards. As I've said before, I prefer the 5-pointers and will settle for a 10-point fill if I can't get the 5-point. To me there are many benefits to trading verticals 1 wide, while there are drawbacks to trading them 4 or 5 wide.
Nope, no b-flies left. I have an IC right now that I will be looking to close out. I was going to close it Monday but decided to get a little cute with it. We'll see what happens today. If we rally today I will just close it out. If we drop today then I am going to leg out of the put side and try to juice some extra profit.
Still in the IC. Just didn't get the move that I was expecting today. Plan on closing out tomorrow though (given that they expire tomorrow anyway
). It was nice only having the one position to manage fo the past couple weeks.Given the numerous demands on my time for the next month or so, I will likely have fewer positions this month too. I plan to utilize a slightly more hands off stratetgy this month which might mean smaller profits, but such is life.
You try it first and let me know how it goes. LOL
Today's Action
BTC 1 SPX JUN 1240/1245 p @ 2.00
3 SPX JUN 1310/1315 c Expired worthless
Year to Date P/L
Account Value: $13,841.50
YTD Gross P/L: 4,365.00
YTD Commiss: 523.50
YTD Net P/L: 3,841.50
YTD % P/L: 38.4%
This rally seemed to be losing steam so I decided not to risk giving up some profits. I'm logging the 1310/1315 call spreads too because it is relatively impossible for this market to rally 60-points today.
BTC 1 SPX JUN 1240/1245 p @ 2.00
3 SPX JUN 1310/1315 c Expired worthless
Year to Date P/L
Account Value: $13,841.50
YTD Gross P/L: 4,365.00
YTD Commiss: 523.50
YTD Net P/L: 3,841.50
YTD % P/L: 38.4%
This rally seemed to be losing steam so I decided not to risk giving up some profits. I'm logging the 1310/1315 call spreads too because it is relatively impossible for this market to rally 60-points today.