Selling SPX boxes for interest

Discussion in 'Options' started by FSU, Apr 3, 2018.

  1. Robert Morse

    Robert Morse Sponsor

    You should enter the box as a 4 leg spread.
    It will not be executed as legs, but as one trade with f prints.
    If you are adding or taking liquidy, I have no idea but it is likely you will be adding.
     
    #31     Feb 16, 2019
  2. tried to trade ES 2750 - 2800 box but found difficult to lend 1mn which requires trading close to 100 contracts x 4 legs = crazy commission
     
    #32     Feb 26, 2019
  3. FSU

    FSU

    @entropytrading I think you will have much better luck in trading the SPX for boxes. Lending 1 million would require you to do only a 4 lot of a 2500 box, so 16 contracts, so maybe $20 in commissions. You can watch time/sales for a box to go by and get an idea of what is trading for. I see some of these trading every day. Then enter it into the spread book at a price slightly better than what you want to get filled and walk the order down slowly. You will have no exercise or pin risk here as it is cash settled.
     
    #33     Feb 26, 2019
    entropytrading likes this.
  4. Robert Morse

    Robert Morse Sponsor

    What price did you try to sell and what month? How did you calculate your breakeven?
     
    #34     Feb 26, 2019
  5. ES options tend to be more liquid but should use EV from now. I don't think 4 lots EV will result in 1mn debit?
     
    #35     Feb 26, 2019
  6. Robert Morse

    Robert Morse Sponsor

    ES options do not create a credit in a margin account so there is no reason to do that.
     
    #36     Feb 26, 2019
    FSU likes this.
  7. FSU

    FSU

    Not sure what you mean when you say EV, but a 4 lot in the SPX of a 2500 box is indeed 1 million. Sell the 2600 put and 100 call, buy the 100 put and 2600 call, that's 250,000 per box, x 4 is 1 million
     
    #37     Feb 26, 2019
  8. right, didn't expect there would be open interests at 1000 strike
     
    #38     Feb 26, 2019
  9. Robert Morse

    Robert Morse Sponsor

    You do not need OI to do this. you need a market maker that monitors the COB and has a little edge at a price you do to.
     
    #39     Feb 26, 2019
    entropytrading and FSU like this.
  10. right i cannot leg as there arent quotes for the crazy OTM strikes like 1000
     
    #40     Mar 1, 2019