there are a lot of people here who also are happy with a little reprieve on the rise. the market can easily retreat, then rise even faster. no one know's. i seem to have a good discipline when it comes to sticking with my rules;i will roll if i have to. i will not hesitate. i still would like to write some puts, we will see.
my current positions er2 @ 764.90: -10 nov 805 calls sold @ .85 current value: 2.80 -10 nov 815 calls sold @ .80 current value: 1.25 er2 traded at 749 when sold -10 nov 820 calls sold @ .55 current value: .80 er2 traded at 749 when sold -10 nov puts 625 sold @ 2.40 current value: .15 -10 nov puts 640 sold @ 1.20 current value: .35 -10 nov puts 680 sold @ .9 current value: 1 er2 traded at 764.90 when sold 10/20/06 i have orders to close some short puts. i will update when they hit. account liquidation value: 96,660.42 overnight liquidity: 42,461.66
my current positions er2 @ 764.70: -10 nov 805 calls sold @ .85 current CLOSED @ .30 / ER2 TRADED @ 751 when closed -10 nov 815 calls sold @ .8 current value: .3 -10 nov 820 calls sold @ .55 current value: .20 -10 nov puts 625 sold @ 2.40 CLOSED @ .05 er2 traded at 749 -10 nov puts 640 sold @ 1.20 current CLOSED @ .10 er2 traded at 749 -10 nov puts 680 sold @ .9 current CLOSED @ .15 er2 traded at 751 NEW TRADE: -10 ER2 692.5 sold@ 2.50 er2 traded @ 751.2 when sold account liquidation value :101,050.17 i am looking to add puts and calls. i will close my remaining short calls (815 and 820 nov) tuesday.
Do you have an idea what your average monthly return on capital is? I trade mainly rut and use spread to increase my leverage. I like to compare the result of your span margin leveraging with my rule-based margin. I used to write naked calls and puts, but I use spreads now to increase my leverage.
my return this year has been about 10 percent each month. again, i feel that in doing spreads you are placing your bets closer to the market to receive that tiny premium. i am further away than spreaders,i receive a greater premium, and i can manage a position gone bad better...imo. again, to reiterate; with the last runnup many people lost money because they were closer to the market with very small premiums so the loss was in many cases multiples of the premium received. i had no problems. if my short was to go from say 2.5 in value to 5 or 6 , i will close the position. that is a 2:1 risk reward; not unlimited. starting in january, i plan on going further out for a 6 percent return and remove approximately 70k from my account and work with 30k. i will still make a nice income.
Thats a very good return. I am using spread not for protection, but for leveraging. How much span margin do you normally use when compared to your capital?
right now , overnight margin set aside is 25% of my account. very important to know is this changes based on so many reasons. therefore i would recommend figuring maximum margin for all positions (3500 per contract); although it rarely gets to that point. you also need enough to roll if that's what you want to do. the worst margin for me was 60% set aside when my short calls were 25points above the underlying. learn as much as you can about span margin and remember, if you can get 6 to 10% per month for every 10k, that adds up fast. also, it is not easy, it takes work to earn that.
Thanks. I understand the power of compounding. If we can make 6% a month, it means an annual return of 100%. With 50K, you will have over 1 mil in less than 5 years. I still haven't started trading future options because I don't understand span margin. I don't have the formula for it. I have searched the web and posted in et, but nobody seems to know how it is calculated.