I have a level in mind, won't provide details on that. However, moreso than a level play it's a time play, stat says no 2014 low breach in 2015; that does not prevent 2016 Jan 2nd from taking the level
When SPY Sells off 5% in Two Days
- Thread starter timetotrade
- Start date
I have a level in mind, won't provide details on that. However, moreso than a level play it's a time play, stat says no 2014 low breach in 2015; that does not prevent 2016 Jan 2nd from taking the level
Sellers of Credit Spreads got creamed - The steamroller flattened all the pennies, yearly profits most likely gone.
Really? Sellers of slightly ITM call credit spreads got creamed?
jimmyjazz ....... You are a slow learner stuck in newbie mode. My post is in reply to md2324's post:
OTM credit spreads was the topic of my post. Try and keep your replies in context of the discussion.
Perhaps it's the voices in jimmyjazz's head controlling what he posts - LOL. But his post was clearly referring to ITM vs OTM.
As far as calls vs puts is concerned when I see someone mention "Selling Credit Spreads" I assume it's an Iron Condor type of position involving both puts and calls - unless otherwise stated as being only calls or puts.
I dunno...I entered the week with 5 short puts on NFLX and walked away with only a $250 loss. I've made all that up the previous weeks doing the same strategy. My HD and UNH short puts were fine. I closed them early Friday morning with a profit to take risk off the table, but I could have held them until expiration yesterday and they both would have expired worthless. If I was holding NFLX stock, then I'd be looking at a several thousand $ loss this week. I think it's safer to short OTM put options than holding the same quantity of stock. Both have the same theoretical loss potential, but probability of success is in your favor via the option strategy. That said, there are times to short volatility and there are times not to short volatility. This is not a time to short volatility.
Btw, more importantly, what are those strategies that you consider better for making money?
No way man. OTM puts mean you're going to be short gamma and vega vs a delta 1 underlying. Unless you hedge continuously or quickly you could see explosive increases in option prices you're short on going from a low to high volatility environment. Obviously time to expiration and strike are involved here but OTM positions are only going to get worse the closer they get to ATM.
I think the fact that you walked away with little loss means you might be selling very OTM and such positions have insidious risk baked into them. You're skirting a dangerous edge with "probability" here.
Yeah, short puts can be lethal...I had a variety of spreads and a few different butterflies on over the past week in ES futs options...Just to illustrate how much these things moved, the long legs I purchased at roughly 9.00/6.00 pts the prior week...those things went out around 70/58 (don't have it right in front of me)...the 1750 strike Oct puts were trading at about 3.50 as late as Wednesday afternoon, they closed around 18.00 on Friday (200 pts OTM)...I've seen this stuff before, but it's been a very long time and suffice to say the "conditioning" that the market can never crash again is very strong.
Maybe I'm the only one, but no one is talking about that potential (and yet we've had hundreds of market crash threads over the years when the conditions AREN'T there)...