Pricing a vertical credit spread

I want to write a new vertical credit call spread and offer it for sale.

But I have no idea how to set my asking price, and I have not found anything on this subject in the literature.

Suggestions would be most welcome.

 

Are these options on futures contracts? Simply create the spread on the TT platform and TT will generate the implied bid / ask spread for you. Then submit the contract request to the exchange and they'll create the exchange defined spread for you.

 

Sell the vertical with a limit order. Post your broker/trading tool and someone may respond with an example order.

 

You need to sit down with your computer and do some serious homework.
Start on your brokers website, where you should *expect* to find materials executed on the platform you use.
Hit youtube -- google vertical credit spread.
Then come back with whatever questions you have.
Or, find a tutor. I've seen them on craigslist -- about $1000 an hour.
Might save you money.
Seriously.

 

Thanks for your suggestions.

Mr. Rooney, these will be verticals on ETFs, equities and indices, no futures. Any place else I can go to get bid/asks on those?

I've been doing vertical credit spreads for years, but these were EXISTING spreads found on ToS Spread Hacker, not newly created spreads.

Stepandfetchit, of course it will be a limit order.

Tommcginnis, been there, done those (not the $1,000 tutor!). Recall please that I posted that "I have not found anything on this subject in the literature."

 

Larry_G:
I'm not following what you want! If you already know how to place the limit order for your trade, you have access to the BID/ASK of each leg of the spread as well as the Mid and Natural of the Spread! What more do you seek? -- For very liquid instruments (Near the money SPY for example), the MID price of the spread is close to a fair price. -- You set your price according to your requirements.

 

If you've been doing this for years, then you know the second half of your sentence is meaningless.

 

Make a spread on the order ticket. Look at the mid-price. Provided the volatilities on the chain are not "off", then you then ask for that price or better.

You can't get any closer to real world pricing than that.

 

Yeah, what do you want to trade? Give us an example! Which underlying and options??

 

First, my thanks to all who posted constructive answers to my question.

Here's what I think you are saying:

There's no need to set a bid/ask or price for the spread per se. If you are writing a bear call spread (for example), you simply use limits to set the minimum you will accept for the short and the maximum you are willing to pay for the long, using for guidance the respective current bids/asks for each leg.

Is this correct?

If so, that's all I need to know. If not, I'll answer JackRab's question tomorrow.