Michael I used to use Option House. They are supposed to be cheap. They dont give you the best prices though like TOS. One set of credit spreads in TOS is $1120 and that is each way. _For your 350 contract lot. So round turn you are looking at $1140 is my guess in TOS. The difference in Option House is slight. I suppose if you are doing an Iron Condor then you would be $2240 one way.
Unless something drastically happens in the last hour and a half, my week was pretty good for me. Long option buying short trades $ 14 $ 964 $ 114 $ 864 $ 464 ===== $2420 for the week in long options using Nov. monthly. 20% return on capital ( $12,000) Credit Spread $ 840 weekly 3.3% return on capital( $25,000) TOTAL: + $3260 ========================== Total capital used during the week was $37,000 Total return on capital 8.8% return on capital for the week. ================================ As you can see, if you can get the timing right, the return on capital is greater in buying, than in the credit spread and the risks are less in dollars, but perhaps not in actually timing of the trade.
Falconview, No kidding that was a great week. You should set up a document to start saving the totals. Will make it a lot easier to see if a few months the progress. I would love to see that. Michael
One of the many ways to play it, good job. I would lean towards the calendar if you expect iv going up, as in a market decline. But if short is otm then it can surely work. Essentially a covered call with options. Good job on the nice week.
falconview, so how ould you allocate funds for each trade if say you have $100,000 in your account to use? I know this is inportant part of cash management, need to learn more about it. Thanks Michael
Michael I´m up $11,000 since my credit spread loss of $20,000 or so back three months ago. Went up from $82,000 to $93,000 thereabouts. I hadn´t thought too much about trading $100,000 for start up. Still going to start with a minor $5000. Probably trade only buying LONG OPTIONS and possibly two at a time. Roughly needing half of the $5000 for a single trade. Probably two contracts each trade. Prices for ITM are usually around $11.. Sometimes you need to double up,when you get an early false signal. I´m concentrating on not LOSING. Not really thinking about winnings per se. I want to get into a boring repetitive rythm. I suppose once I build up to $30,000 or so, I might then use my winning weekly credit spread. Which occasionally loses but not much more than commissions. I´ll add $5000 periodically as my comfort zone and confidence allow me. Not going to start off with anything like $100,000 to bet. Of course I want to do that. But need a lot more success under my belt before I do that. I will not trade the credit spread for a while, once I move into cash. Perhaps only on the paper trading to keep my hand in. I´m wanting two more successful weeks, and then I´ll send off my first cheque for real money to TOS. Want to start trading real money for January.
looking forward to hearing how the real cash changes your way of thinking, if at all. Good man. I am not ready yet for any cash. Michael
Real cash does change the way you trade. Been there done that before! You can´t treat reversals and false signals with the emotional equanimity that you can paper trading. Real cash losing fears distort the game plan. LONGER CREDIT SPREAD TRADING Michael I´ve been thinking about longer term credit spread trading. The advertisement for credit spreads is as an expiration TIME DECAY collection trade. From your experience and postings on the amounts you are getting in premiums on longer term trading, I was thinking of doing 5 trades a year, based on DIRECTIONAL and closing them out, rather than going for expiration. In other words credit spread longer term trends with one to six month out options where the premiums are bigger. But any TIME DECAY COLLECTION would be icing on the cake and you go for the directional on the trade. I seem to recollect you made as much on a single monthly credit spread, as I made on 4 trades using weeklies. Due to the premiums being much bigger. It should be fairly easy to just trade trends, using weekly charts. Will have to look into the premiums and compare by practice say a two month out premium, versus a six month out premium, or a one year LEAP premium. Then let it run the trend and see how you do? I wonder what ELITE TRADER has to say about that? This would enable you to skip watching a computer and doing your torture rack profession. ( grin )
Falconview, now you are really thinking! This week I am sitting down with my firends patient who got me thinking about the whole index credit spread idea. I have read a few notes he wrote, but now I am ready to pick his brain on what he does. He has been doing this for many years, and actually said that now he does go three months out in his option picks. We are having dinner on Wednesday and I am really looking forward to seeing a real life profitable strategy laid out. I will let you know what I pick up after that. Love to hear your thoughts after you start to look further out with the spreads. Michael