Vertical Spreads for Aggressive Growth

blk · Sep 19, 2006

Quote from ryank:

I haven't looked at them for a long time but when I did I found way to much risk for me. I'm not sure I know anybody that trades those, I'm sure there is somebody out there messing with them.

I used to be paper trading double diagonals on those - selling the weeklies and buying the regular options in March-Apr. It worked quite well (since the volatility was low) - but then since May, we all know what happened.

The 5 limited strikes doesnt allow for many adjustments. A sharp move can make all the strikes ITM or OTM with nowhere to adjust. I guess its the chicken and egg story - CBOE wont add additional strikes to this test product unless more volume comes in. More volume wont come in unless there are more strikes

May need to find new ways to fiddle with them...

Crucis · Sep 19, 2006

Quote from jllm03:

It looked like maybe a scalp play for a credit spread, if there was a big spike in the SPX the first part of the week.
But yeah, it does have a whole lot of more risk, but also reward if the market pulls back away from your strike...
Was just curious to see if anyone might have scapled this for a spread.

I did a couple of times last Spring and was successful. The stress level, however, can be extremely high. If you can predict the trend, you can make money. Making the correct prediction, however, isn't easy. Some cases, you'd be better off flipping a coin.

momoneythansens · Sep 19, 2006

Quote from jllm03:

Have you thought of using the WEEKLY SPX Options?
Any input?

You may wish to review this thread for ideas and thoughts on weeklies.

The problem is the high gamma in these short term options + CBOE listed only = wide b/a spreads.

Also, this post for musings on b/a spreads in expiration week. Weeklies are of course always in expiration week.

Prosperous trading

MoMoney.

Cache Landing · Sep 19, 2006

Quote from momoneythansens:

You may wish to review this thread for ideas and thoughts on weeklies.

The problem is the high gamma in these short term options + CBOE listed only = wide b/a spreads.

Also, this post for musings on b/a spreads in expiration week. Weeklies are of course always in expiration week.

Prosperous trading

MoMoney.

I'm going to have to agree with mo's post on the linked thread. These things are very risky as theta positions. They are pure gamma and as such should be considered only for gamma strats or hedges.

It seems that if you have good legging ability, there might be some decent gamma scalping possibilities. I'm not really into DN gamma scalping, so I'll leave that to someone else.

El OchoCinco · Sep 19, 2006

weeklies have football field wide spreads (even more so than SPX regular in my opinion) and limited strike selections.

As was said above, SPX weeklies are for homerun bets on direction.

Cache Landing · Sep 19, 2006

Today's Action

STO 5 OCT VLO 47.5/50 p @ 1.00

Year to Date P/L

Account Value: $15,660.00

YTD Gross P/L: 6,395.00

YTD Commiss: 735.00

YTD Net P/L: 5,660.00

YTD % P/L: 56.6%

ryank · Sep 19, 2006

I'm an idiot! I accidently put in an order for Sep end of month options instead of Oct regular options and I got filled :mad:

. Nice boneheaded move

. Of course the trade instantly went against me soon after. I did the trade earlier this morning and just discovered it, %$#$%#@!!!

Crucis · Sep 19, 2006

Quote from ryank:

I'm an idiot! I accidently put in an order for Sep end of month options instead of Oct regular options and I got filled . Nice boneheaded move . Of course the trade instantly went against me soon after. I did the trade earlier this morning and just discovered it, %$#$%#@!!!

I'm glad I'm not the only one who does that. I feel for ya.

Been there, done that, did not get the t-shirt!

Cru

ryank · Sep 19, 2006

Quote from Crucis:

I'm glad I'm not the only one who does that. I feel for ya.

Been there, done that, did not get the t-shirt!

Cru

I was on the phone earlier with ToS about a different trade this afternoon. After we got it all settled he asked if there was anything else he could do, I said yes, please undue my bonehead trade. He laughed and said we all do that every now and then. I couldn't get my trade busted like RichardRimes did recently. Maybe I need to trade more to become a more valuable client

.

Crucis · Sep 19, 2006

Quote from ryank:

I was on the phone earlier with ToS about a different trade this afternoon. After we got it all settled he asked if there was anything else he could do, I said yes, please undue my bonehead trade. He laughed and said we all do that every now and then. I couldn't get my trade busted like RichardRimes did recently. Maybe I need to trade more to become a more valuable client .

You see the announcement about the ToS merger? ToS is merging with InvesTools. I'd retained my InvesTools account simply because it has the best research tools that I've found. They've a new spread scanner that is better than the ToS version, IMO.

Course, I'm still new to ToS.