I got burned, but I dont know why

Discussion in 'Options' started by ANCOLL, Sep 7, 2007.

  1. ANCOLL

    ANCOLL

    Dear option traders,

    Yesterday (6 sept 07)
    I did bull credit spread with SPX weekly sept week 1 on thursday

    BUY PUT Sept week one SEP1 1450
    SELL PUT Sept week one SEP1 1465
    credit $117
    The closing index that day was 1478.55


    This morning SPX opened at 1475.02

    Which mean SPX didnt ever touch 1465, but I really dont understand why in CBOE weekly settlement shows
    1458.98
    as its weekly settlement price?

    Because of this, my trade got exercised with loss $602

    Could anyone explain about this?
    thanks in advance.

    :(
     
  2. You need to learn what settlement is before trading SPX index options. Settlement has noting to do with where index options. SET is derived from the opening of all 500 stocks in the index and they all do not open at 9:30 AM.

    Go to CBOE website and look up SPX SET values and description.
     
  3. ?........1465 minus 1458.98 equals 6.02 points times 100 dollars per point equals $602 gross loss plus $117 credit equals $485 net loss?
     
  4. SPX and a few other index products settle at the "SOQ" (special opening quotation. )

    This is all 500 prices of the S&P 500 stocks, not just the first print of the index.
     
  5. ANCOLL

    ANCOLL

    Thanks for immediate reply,
    I will check it now.

    Maybe there's another reply for my exercised trade...

    :(
     
  6. ANCOLL

    ANCOLL

    Thanks for immediate reply,
    I will check it now.

    Maybe there's another reply for my exercised trade...

    :(
     
  7. cvds16

    cvds16

    rather dangerous doing that kind of thing with big numbers coming out.
     
  8. kny3

    kny3

    Agreed, cvds16. Also agree with Coach about knowing how AM Settlement works.

    kny 3 :cool:
     
  9. ANCOLL

    ANCOLL

    Here is the picture to clearify the trading.

    On thursday 6 sept07, SPX index close @ 1478.55
    [​IMG]


    On the next day, the settlement for SPX from CBOE was announced @1458.96
    WHAT THE ????
    [​IMG]


    And my trading is got exercised, but i dont know why...
    The opening quote for SPX on the next day was @1478.55
    [​IMG]


    :( :( :(
     
  10. kny3

    kny3

     
    #10     Sep 8, 2007