S&P options spread trading suggestions

Discussion in 'Options' started by opt, May 29, 2013.

  1. opt


    I used to trade the S&P 100 options from the CBOE. Small order size. I had an account with IB. That was more than 10 years ago. I am thinking to trade S&P 500 options spreads (short box spread). Is IB still one of the best? Any recommendations on the products I could trade? Are options on S&P 500 ETF good to trade? Thanks!
  2. 1245


    What edge would you get from shorting box spreads?

  3. opt


    I am exploring the feasibility of collecting the theta with defined risk. I don't have any edge at this point but with experience I am hoping I can develop some intuition about the probability of the underlying movement.

    I don't like being short and double down when the market is going against you. You can be profitable all along, until one day you'll lose it all.

    I like short spread so the loss is defined. I'll trade small to start so I can afford the loss. If I see myself improving I'll continue, otherwise I'll stop. The problem I had with trading spreads back ten years ago was the bid/offer spreads were big. I heard they were getting narrower. I suppose that is the result of market-making now is done mostly by algorithm?

    Talking about market-making, the bid-offer spread is one of the few edge you can have (plus superb hardware technology), or am I missing something?
  4. Also, setting edge aside for a moment, the logistics of trading the box using European-style cash-settled options (SPX) will be much less complicated than trading it using the American-style physically-settled options on the ETF (SPY).
  5. opt


    I am really out-dated. Did not realized that options on an ETF would not be cash settled. Don't want that.

    I Just found that CBOE had launched a Mini-SPX options back in 2005. One of my reason trading the OEX options was the smaller size. But I just could not get a feel of that index value. The Mini-SPX seems perfect for my purpose. I assume it'll have wider bid/offer spread than the SPX options.

    I only have an Ameritrade account at this point. Is IB good to trade Mini-SPX options spreads? Thanks!