Hello falconview, I still think some of your credit spread thinking is flawed. You mention one loss can nearly wipe you out, but only if you sit there, watch it go against you and do nothing. The adjustments are not difficult, rolling further OTM does cost a bit, but nothing like the losses you are talking about. If you have 200K to use, 100K per year is conservative and very doable. Check out the MCTO ROI page and scroll down to the trades that show the adjustments as well. Yes they screwed up in April/May, but with my further OTM strategy, you would not run into that same problem. Take care, Stanford
Stanford Hmmmmmnnnn! Don´t know if you are right or not, as we are trading different indexes. Plus I´m doing weeklies and you are doing monthlies. I do know a month or so back, I lost $20,000 on a credit spread in TOS and am working my way back out of the hole. Doing alright, but it left it´s mark on my pysche. Plus I got a wife to answer to. I don´t want to use that much capital while learning the game, you talk about. Been there, done that and lost that before! Things are rolling along well enough this week here. Made $200 on a paper SHORT STRADDLE between Monday and Wednesday today. Tried a Vertical CALL spread this morning for the first time on paper and bolloxed it up royally this time. Don´t know what the heck I did wrong? I thought I was supposed to have a debit? Have to go back when there is more time and read the instructions again. Something didn´t work out the way it was planned and I got the move forecasted right too. Cést la vie! Good looking market this week though, to make some money. I like it when you get it down to a boring routine. Shows you understand the dynamics.
falconview, I was just about to do my first adjustment one of the test positions I had, even though we were still a long way from the strike price. I think that is the key to not losing the 20K that you did earlier. You have to adjust much sooner. That is where one of rules I was looking at said to adjust once you got to losing 150% of the credit you got in the original postion. Roll down to a further OTM price. Net it will cost you a little, but not that much. The question is, do you want to be sitting in front of the computer for hours, or lying in that hammock, looking a couple of times a day? I like #2, and if I can conservatively average 4% per month (after any losses), I would be thrilled. With 200K, that would leave you 80K per year, little stress and time at all. I know there is a flaw in my thinking somewhere, just too inexperienced to know what it is. Michael
Ha! Ha! Ha! "I know there is a flaw in my thinking somewhere, just too inexperienced to know what it is. Michael" You got that right ( grin! Sheesh! Spanish keyboard and I can't make it work sometimes on this computer.
Stanford I've got a Vertical Spread order in with TOS at a limit of .25 cents for the last two hours. Haven't got filled yet. It's a 500/505 50 contracts. Give it another hour and then re/consider if I want to cancel, and then drop my offer, or pass and let it just fade away at market close. Doesn't seem to be much action? I need a little uptick in the market of 1 point or something to get this thing in.
OK, so tell me what it is, I know it is there. thanks One question (just learning the tos sytem). when it shows p/l open, I presume that means if I closed all the positions at the market price, that would be profit. Right now it is sitting at 7.5K and the total credit if all options expire worthless is 10K. If I was trading for real, it would be tempting to just cash out now. Here are the positions -33.14206 NDX 100 SEP 10 1550 PUT ($2,100.00) ($7,700.00) 0.85 -1.25 4.70 ► 15 -20 45.08464 NDX 100 SEP 10 1575 PUT $2,900.00 $9,700.00 1.15 -1.5 6.00 ► 15 +10 -30.22766 NDX 100 SEP 10 1600 PUT ($2,125.00) ($6,175.00) 1.525 -2.695 7.70 ► 15 -10 41.64752 NDX 100 SEP 10 1625 PUT $3,000.00 $7,700.00 2.1 -2.91 9.80 ► 15 +10 -58.1254 NDX 100 SEP 10 1650 PUT ($4,250.00) ($5,450.00) 2.95 -3.98 8.40 ► 15 -10 80.96934 NDX 100 SEP 10 1675 PUT $5,900.00 $6,450.00 4.15 -5.62 10.60 ► 15 -10 -37.8944 NDX 100 SEP 10 1950 CALL ($600.00) $6,775.00 1.025 0.705 7.80 ► 15 +10 18.49506 NDX 100 SEP 10 1975 CALL $300.00 ($4,025.00) 0.475 0.335 4.50 Thanks
Stanford Good gravy! What a lot of positions. Makes my head spin! Sad to say, I don´t understand their profit loss thingy either. They adjust according to the current changes in price of what you have trades on. I understand the margin deducted from the account. Of course your individual trades would go into and out of profitability and effect the sum total, or showing what the profit or loss was on your account. I´m closing down for the day here. I bet based on different criteria and one of them is TIME BASED and for today I´m finished. Tomorrow morning is another day. I had thought to put on another short straddle, but I think the market is too high for it to work. So will skip it. I did get FILLED though at .25 cents, glory be and stuff like that. I´m in for 50 - OEX 500/505 come what may now for .25 cents. Vertical Call Credit Spread I´m gone kiddoo!
I think it is pretty simple, just sept bull put spreads, starting at 1675/1650, then 1625/1600, and 1575/1500. Yesterday I was thinking the 1675 was getting too close for comfort, and was looking at rolling that further out. Also one bear call credit spread at 1950/1975. At the moment they all look safe to me with 15 days left. Michael
Stanford Okay I´ve had my afternoon nap and ate lunch. Lets see, you have 15 contracts of each and you think you have a profit in total, you could close out and collect as profit. Sounds good to me. Not the way I can do it in the OEX as things are tighter and shorter on the weeklies. So, I´m not familiar with this approach. I have to go to expiration. Neither have I looked at the NDX. If you ask me questions in the middle of my own trading, you probably will get a short reply. Only so much thinking I can stuff into this old brain at one time. Not too good at multi-tasking. Sorry about that! BIG PAUSE WHILE I LOOK AT THE NDX - Well you are looking at 1822 as your NDX top for the day more or less. You have a ratio of 4 points in the NDX to my 1 pt OEX today of 13 pts.. My OEX 500 overhead target is your NDX 1862. A cushion of 40 pts for you. I´d say your very good. I debated about putting on Bull PUT credit spread verticals, but decided not too , as it is too early still in the week for me, for the risk parameters. I did put the overhead Vertical Credit Spread CALLS 500/505 though. 50 contracts. Your index parameters seem to overlay my OEX pretty much on top of it? I have a cushion of 10 pts in the OEX or two strikes, to your 40 pts in the NDX, which on a weekly, for a Thursday location is fine by me. Market has been closed for 2 1-2 hours so I can look at it. You seem to be okay? But in a monthly you have more time to wait. If you have a 10 k profit overall, that sounds very nice to take. I don´t know how to figure that, as it doesn´t fit my weekly pattern of trading. I go through expiration with my trades. Tomorrow I will try to leg into an IRON CONDOR. Probably try again for a short STRADDLE credit spread and if possible a short STRANGLE. Remember, I am trading different from you and am in Expiration Week for me.
Stanford Early hours of Thursday morning. Had my cup of hot tea, some rum and honey and raring to go. Full of calories. Thought about your $7500 windfall profit. TAKE IT! I had forgotton that in a monthly you can earn money two ways. Through market movement and through time decay. In the weekly I mostly am just doing THETA trading, or time decay collecting. Though I did try to capitalize on the opening break like you did Wednesday morning, as I was expecting it. A sloping pennant over two weeks was hard to ignore. The difference was; I tried a FIRST TIME EVER BULL DEBIT CALL SPREAD on scratch paper. I was trying to place three different types of this spread to see what would happen? The one strike OTM and the ATM, the two strikes OTM and the ATM and the two strikes OTM and the one strike OTM. Wanted to see which one earned best. As it turned out in the excitement, I made a mess of it and didn´t establish DEBIT spreads and had to scrap the experiment and do it another week and time. Phil from the SPX credit spread trader always was talking about taking profit off the table and having time to do some new trades in a monthly. Just that I´m not familiar with that in the weeklies yet.