Vertical Spreads for Aggressive Growth

[Cache Landing]

Today's Action

STC 2 AMGN OCT 67.5 c @ 3.50

Year to Date P/L

Account Value: $14,845.50

YTD Gross P/L: 5,480.00

YTD Commiss: 634.50

YTD Net P/L: 4,845.50

YTD % P/L: 48.5%


Got out of the AMGN calls at B/E. Unfortunately they didn't do their job, so I decided to close out the position.

 

[ryank]

Quote from ryank:

I finally decided to roll up and out of my ATM XEO spread. I increased the size and am short the Oct 620/625 calls for an overall net credit. So in reality, I closed my Sep position for a loss and opened a new one for Oct. Win some, lose some. I just don't want to lose 2 in a row on XEO . With my loss for Sep in place, let the market drop .

Couldn't wait one more day could I .

 

[Cache Landing]

Quote from ryank:

Couldn't wait one more day could I .

you might be glad you closed if the beige book comes out and causes a rally this afternoon.

 

[ryank]

Quote from Cache Landing:

you might be glad you closed if the beige book comes out and causes a rally this afternoon.

Don't jinx me now. If we get a rally it will hurt my SPX diagonal where I'm making some good cash on the pullback and pop in the vix.

 

[rallymode]

Quote from ryank:

Couldn't wait one more day could I .

What made you close? it's not like you had alot of risk.

 

[ryank]

Quote from rallymode:

What made you close? it's not like you had alot of risk.

You're right, I didn't have a lot at risk as it as a small position. It was/is an educational experiment for the most part.

I put the first position on a few weeks ago expecting a pull back but the market kept creeping up so I "adjusted" to cap my loss and enter a new position to profit from a pull back I thought was coming at some point (little did I know how close it was). I thought a pullback from the new higher level wouldn't be enough to get me to b/e or profit on the original position.

I know you put these positions on and just let them be. I'm just trying out an ATM spread for the first time. Live and learn.

 

[rallymode]

Quote from ryank:

I increased the size and am short the Oct 620/625 calls for an overall net credit.

Looks like you switched away from ATM?

 

[ryank]

Quote from rallymode:

Looks like you switched away from ATM?

I did this because I wasn't sure how much more creeping the market was going to do so I was trying to get ahead of it by going CTM instead of ATM.

 

[Cache Landing]

Quote from ryank:

I did this because I wasn't sure how much more creeping the market was going to do so I was trying to get ahead of it by going CTM instead of ATM.

I'm not going to comment on your trade, because it is up to your personal style and risk tollerance.

I just wanted to comment on ATM/CTM credit spreads. One thing to remember is that it is very beneficial to keep in mind a slightly longer term forecast of direction and vols. This will help you immensely in your adjustments. What I mean is that if I were to have opened the same spread that you did, I would have been thinking to myself that the bear move would come sometime between now and the end of OCT. This would have allowed me to sit tight on the current spread a little longer and if I did have to roll it wouldn't have cost me anything in terms of additional debit or risk.

 

[rallymode]

Quote from ryank:

I did this because I wasn't sure how much more creeping the market was going to do so I was trying to get ahead of it by going CTM instead of ATM.

Had it been a CTM spread, after all this time, i am certain it would've been in the green albeit slightly. Certainly, a better place to adjust from if an adjustment was deemed necessary.

Perhaps, it was the "ITM" status that got you worried and the lesser risk just wasnt comfortable enough. Is it better to give yourself some cushion and trade off some risk? Only you can answer that, just something to think about next time.