Vertical Spreads for Aggressive Growth

SPX has dropped quick enough that I'm considering a OTM bull put.

I also like AMGN except for the ER on the 27th.

As usual having a harder time finding good bearish setups. I will track down a couple this weekend and be ready on monday.
 
Cache,

Do you enter stop losses for your spreads, or do you close if the spread hits a mental stop.

Am using TOS and they say they don't do stops on spreads.

Appreciate your thread, good stuff
Cheers
 
Quote from graemem:

Cache,

Do you enter stop losses for your spreads, or do you close if the spread hits a mental stop.

Am using TOS and they say they don't do stops on spreads.

Appreciate your thread, good stuff
Cheers
More...

I'm never in such a hurry to exit a position that I need a stop in place. As far as spreads are concerned, I've found hard stops to be more harmful than helpful. Rather than have a mental stop in place, I actually have a re-evaluation point in mind. At that point I can better determine what should be done with the position based on current conditions.
 
So for example your re-evaluation point may have been breached, however a support/resistance level may have held which would incline you to see how that panned out?
Cheers
 
Quote from graemem:

So for example your re-evaluation point may have been breached, however a support/resistance level may have held which would incline you to see how that panned out?
Cheers
More...

Yes. Certain companies really follw one of the simple moving averages. Since it is a moving average it is too hard to set a concrete stop. Also, say I'm using the 50SMA on a certain company. I don't exit the position just because the underlying drops below that line. I'm more concerned with a continued move. I need it to close below the line and then give me some indication that it isn't going to reverse on me.
 
Seems like a reasonable strategy for spreads. I have been allocating fixed $ amounts as a % of my account as a risk/stop level. However this is still an arbitrary stop as one trader could have a 1% risk level, another 2%. With this method one often closes on a breach of the 'stop', only to have the spread turn around and go for what would have been a home run. Only problem then is satisfying yourself that the next level, be it Support/resistance, stochs, MACD or whatever, has in fact been breached! In general though I suspect a bit of patience with spreads, especially these ATM ones will be more rewarding, if only for the reason that by going ATM in the first place you have minimised a large chunk of the initial risk in a credit spread. Something the OTM guys perhaps don't realise. Going for ATM, you tend to focus a lot more on minimising that initial risk.

Much appreciate yr sharing yr experience.
Cheers
 
Quote from Cache Landing:

Today's Action

STO 4 GENZ AUG 57.5/60 p @ 1.00

Year to Date P/L

Account Value: $13,829.50

YTD Gross P/L: 4,365.00

YTD Commiss: 535.50

YTD Net P/L: 3,829.50

YTD % P/L: 38.3%


Looking for biotech to be strong longer term, but there might be a lag for a couple months while the rest of the market runs.

Waiting for SPX to get closer to 1290 before I make a move there.
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congrats !
very respectable result for a 6 month run.
 
Quote from graemem:

Seems like a reasonable strategy for spreads. I have been allocating fixed $ amounts as a % of my account as a risk/stop level. However this is still an arbitrary stop as one trader could have a 1% risk level, another 2%. With this method one often closes on a breach of the 'stop', only to have the spread turn around and go for what would have been a home run. Only problem then is satisfying yourself that the next level, be it Support/resistance, stochs, MACD or whatever, has in fact been breached! In general though I suspect a bit of patience with spreads, especially these ATM ones will be more rewarding, if only for the reason that by going ATM in the first place you have minimised a large chunk of the initial risk in a credit spread. Something the OTM guys perhaps don't realise. Going for ATM, you tend to focus a lot more on minimising that initial risk.

Much appreciate yr sharing yr experience.
Cheers
More...

You got it. :) That is why I prefer ATM spreads on equities. They are much more manageable in terms of adjustments when things get a little crazy. When the short strike is threatened on OTM spreads you are already sitting on a pretty hefty loss. As you said, ATM somewhat remedies this problem and slows the bleeding, sometimes long enough to adjust and come out smelling like a rose.

My only word of advice to people looking to get into ATM spreads is to leave your emotions behind. An ideal situation would be to have split personalities. The first would execute the trades. The second would be able to re-evaluate tickers that the first has already opened positions in, without considering the existing position. Avoiding what I call "revenge trading" or "hold and hope" is key to this game. IOW, as I said in a previous post, THINK AT THE MARGIN.:D
 
Quote from Tums:

congrats !
very respectable result for a 6 month run.
More...

Thanks for the kind words. The question is whether or not this journal can hit 100% by the end of the year given the current market conditions. That's my new goal for the year. I'm fine daytrading this market right now, but I don't post my daytrades or other more complicated positions here. I've tried to keep this limited to basic verticals and long calls/puts. The whipsaw action in the broader market has kept me silent recently as far as swing trading goes.
 
Didn't realise you daytraded on the side. No wonder you're so good at adjusting :p

Are you using similar setups for your day-trades, and concentrating on similar sectors?
 
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