Writing On Thur and Fri Before Exp Week.

Quote from forex-forex:

On a percentage basis you will find that the option prices on a $50.00 stock compared to a $500.00 stock is almost the same. Margin required to short 1 contract on the $500.00 stock will be the same as 10 contracts on the $50.00 stock.
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Yes but....

If I'd written a 10/10 credit spread for .05,
I'd keep $20. The commish($30) is over half of the transaction,
%60.

If I write a 10/10 credit spread for .50,
I keep $470....
The commish is %6.

Which trade would you rather do, on a percentage basis...:)
 
Quote from forex-forex:

On a percentage basis you will find that the option prices on a $50.00 stock compared to a $500.00 stock is almost the same. Margin required to short 1 contract on the $500.00 stock will be the same as 10 contracts on the $50.00 stock.
More...

I guess I misread your post, I didn't catch the difference in the number of contracts...sorry.

But let's use your example.
The spread in strikes is usually $5 on a $50 stock, sometimes $2.50, but usually $5.
So a 10/10 credit spread would require $5,000 @$5 strike spreads,
$2,500 @ $2.50 strike spreads.

The spread in strikes on a $500 stock is usually $10.
So a 1/1 credit spread would require $1,000 @ $10 strike spreads.

So the margin requirement would not be the same.





Greeks shmeeks. :D
 
Quote from Linda Options:
Before gambling I suggest you get to a seminar or at least invest in some books.
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Most of the posts on this thread - if not all - are on OTM Credit Spreads. OTM Credit Spreads are not gambling, you have received credit ($$$) on a wasting asset.
 
Quote from forex-forex:

OTM Credit Spreads are not gambling, you have received credit ($$$) on a wasting asset.
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Interesting interpretation.

If they aren't a gamble, they must a certainty then?
 
Quote from RichardRimes:

I suspect that Arnie know more about Greeks than he is willing to let on :p hey Arnie did you get filled on the SPX trade?
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Well, I think that first part is a compliment, and thanks for it, but I really can't Greeks through my thick head...and I don't know why. I was pretty good at Math in school, but I just can't seem to get it to sink in....:confused: :( I think part of it is that I don't understand the relevance. It seems to me that it is a look backwards, not forwards, which I know isn't true, so that just adds to the "Why the heck am I wasting my time on this?" attitude. Besides, sometimes there just isn't enough time in a day. I'm comfortable writing OTM credit spreads buy watching the underlying closely over time, and the big one I learned.......
BE CAREFUL AROUND EARNINGS ANNOUNCEMENTS!!!

As far as the SPX trade...that was an event. I really don't understand why I wasn't filled. My limit was smaller than the spread, but I didn't get filled. I watched the volumes, and while not huge, there was more than enough for me to get filled...

Maybe it was a sign, it was my first attempt at an SPX credit spread. Anyway's, if you want, I'll pm you the details.
 
It is very tricky to get filled as the MM's down at the CBOE are very tight fisted around op X and you probably would have to take a big cut off the mid to get filled. The other thing is that at least with some brokers like TOS you can have them call the pit to get the "true" range and help in getting filled.
 
Quote from forex-forex:

Most of the posts on this thread - if not all - are on OTM Credit Spreads. OTM Credit Spreads are not gambling, you have received credit ($$$) on a wasting asset.
More...
Yes, you have received a 'credit' on a wasting asset, but you've also been margined on the same 'wasting asset'.
So, exactly how is this credit spread different from the equivalent strike debit vertical to make it a "not gambling" proposition?
daddy's boy
 
hmmm, I thought that BnS and binomial modules are favorable to opposite strategy (buying). Riskarb ones explained the reason WHY exotic's MM don't take bets with time to exp < 7d , but I cannot find his post.
 
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