Already had a couple of cups before I started my trading day at 7:00AM EDT this morning. A good day thus far. The ES is up +7.75 since trading started last evening. The aforementioned iron has been closed. Ready to place orders for 2 more. Just waiting for the 3-month and 6-month T-bill auction at 11:30. And of Yellin's talk at 4:10 this afternoon.
Steven you are correct. By definition, option spreads imply a long offset by a short-sometimes ratioed else 1 x 1. In the case of an ATM iron condor with current price at "C", it consists of a short D/E call vertical and a short A/B put vertical. The package is a credit spread because you are taking in credits from both vertical sales. Tom- you hilarious
Thanks. I think I knew that. I've been trading credit spreads on the ES for a few years. But never ATM, always OTM. Usually a Delta 15 Delta 5 spreads but occasionally a Delta 20 Delta 10 spreads when other criteria (Theta, Technicals, Fundamentals and VIX dictates.
Bit harsh, but a lot of truth there. Selling options is fine, once you pick the right market (index seem to be the best opps), know about option pricing, never go fully naked, never ever overtrade, and always adjust stops and targets based on underlying moves. In essence, not much different to trading any market successfully..unless you know what you are doing, and can actually do it without even thinking about it, then you really are just wasting your time. The BIG problem with options, compared to futures, is that you have a middle man, and he can pull the plug when he wants, as I learned from experience! Key is to get flat around major event dates like Brexit, or learn how to hedge real fast, which is far from easy for the plebs. Overall, I must agree with you. Stay away from options, at least until you have made enough money to lose some back, as you will lose a good bit learning bout options trading.
Fair enough...Search my post history and you might infer (correctly) that I have an open (losing) position that is very much within the realm of 'special conditions'. Perhaps here's as good a place as any to state a definitive "don't" that should otherwise go unsaid: If you don't understand the risks associated with 'special conditions' (what may otherwise be termed ordinary market-affecting events), don't trade options. But my statement was the counterpoint to a hard-learned lesson (with me as the loser)--and now confirmed by me as the regular winner. You overlay my point with the mantra of diversification and my point is (sufficiently profitably) true in the aggregate.
Only the uneducated will say don't trade options. Learn how to trade options and you'll realize only amateurs trade underlying without derivatives.
With all (very) due respect to today's floppitude (which has raised vol {"Yayyyy!"}, try selling something for Apr20. SHEEESH.), your statement is still, and unrecoverably, wrong. What makes a credit spread profitable is having position theta>position delta|time, regardless of direction, timing, or magnitude. Doesn't matter where the market is; doesn't matter what the DTE is; doesn't matter how many you have on, or how wide the legs. p-Θ > p-δ|t ≡ profit
I can't sell *squat*. I was trying to sell the big Apr20, but screw it. I'll go with the Apr28s -- they're pretty fat, regardless. I've usually gone the day in front of the Monthly (Apr19) and made out pretty well (good prices on lesser bid-ask spreads), but the difference between Apr19 and Apr20 is almost twice in some places. Sheesh! And no, I am NOT putting anything on top for Apr13. Nope! No whey! So.... so off to Apr28th I go, or even May05 if the numbers say so. But Apr28 has been fat for weeks.
As an antidote to the grossly inaccurate (or outright wrong) characterizations of option trading that have appeared in this thread thus far [*most* of which comes from persons who self-identify as non-traders or as outright flunks], I'll give a shot at another "option-trading do/don't" as follows: "DON'T conceive of trading options with your margin capital. Rather, DO conceive of margin-capital "slots" or portions of your total (fixed!) account pie, which you are going to deploy to best purposes, seeking to balance the risk exposure you of what you have "in-use" to the reward to be garnered." Hmmmmm. It's a really basic idea, but I think I just blew the presentation of it. It's basically, don't think of 'seeing a trade' and checking if you have the capital for it -- rather, think of yourself as holding a bunch of equal-value chips in your hand, with you placing them down on the roulette table (deploying them) in the spots you evaluate as having sufficient reward (premium in hand) for the perceived risk. Eh. Probably just as bad.