This was the post that started the slinging. I have a problem with people who take perfectly good threads and crap all over someone's strategy, and an even bigger problem with someone suggesting you hedge your own acct against a client's. Maybe that's the way they do things in Asia or wherever Zen is from. Optioncoach has been good enough to share with everyone a valid and viable strategy for those who are interested. We don't troll the scalping threads peeing on their ideas. If Zen had factual concerns, he could have posted them. Instead he suggested that the best use of the strategy is for client accounts to keep yourself from blowing up. I certainly hope he is not managing money for anyone. Quote from yenzen: This is the kind of stuff that is ideally suited to OPM. I cant even tell the neophytes reading this thread what a train wreck strategies like this can turn into in a fast and illiquid market. The spreads on index options products have widened considerably even as the volatility has dropped off the planet. At least with OPM, u hedge ur own blow up potential in attempting to constantly game the markets for nickles and dimes. In fact, I would go further to say that this is one of the more "crowded" strategies around these days. Notice that the majority of top performers on the Barclays Managed Fund Index have been index premium sellers. Success begets mimicry and alot of guys have been out there selling index premium driving down volatility to a point that is pretty dangerous. Senor Zen
CLOSED POSITION: Took my JUNE scalp off. Remember that I had: 65 JUN 1145/1160 Put Spreads @ $0.65. I closed it out for a net credit of $0.35 Net Credit = $2275 Return on Margin = 2.33% Reminder of Current Positions: 60 JUL 1110/1125 Put Spreads @ $0.80 95 JUL 1260/1270 Call Spreads @ $0.45 Now with a ncie chunk of margin free, I can look for more JULY positions. With a week to expiration I do not think I can scalp anymore in June. June has been a very good month so far given the sideways movement of the market. I will post June results after the month closes. Expect it to stay that way until JULY expiration so will increase my stakes and keep August on the horizon. Phil
Coach, I noticed the bid / ask spreads on SPY are much tighter than SPX. Any reason you are not doing this strategy with SPY ? Thanks for your great thread! esu2
SPY is 1/10th the SPX and OTM premiums are non-existent. There is no premium to sell OTM with low risk. I use SPY for partial hedging since it is cheaper for partial hedges. Phil
Sorry I did not see your question which got buried. Here are some answers: 1. I believe SPX is still the best given the volatility skew and liquidity. After that I like OEX/XEO and then options on E-mini S&P futures. 2. $50K is more than enough to start out. Basically you should not put all $50k margin at risk in one trade. Spread it out so you can always roll into new positions. Look for positions starting out with about $20K in margin. If you do an Iron Condor you will only need margin for one side if they are same sprad on each side (15 points or 10 points). Then you can add one sided spreads or move another month ahead. 3. Maring is the full value of the spread minus the premium received. It is a set aside margin. Phil
Took advantage of the dip today to add a small JULY Put position. Sold 100 JUL 1140/1145 Put Spreads @ $0.40 Credit = $4,000 Margin = $50,000 ROM = 8% Delta of the 1145 Put is .14 which is just slightly higher than what I go for but given that I usually cannot good fills on 5 point spreads I tried this one and for a 8% return I though it was worth it. So I have July call and put spreads and still have some margin open. What I would like to do in a week or so is close one of my July spreads and roll for more July premium to keep my money moving. I have one order to close the JULY call spread posted here and will update if it is filled. Regards, Phil
I am reading this article in today's Money & Investing Section of the Wall Street Journal talking about how "Narrow Market Ranges Stymie Wall Streeters". The article is talking about how the sideways market is giving trader's the blues. I could not stop smiling as I was reading it knowing that a sideways market is a license to print money for me. That is why I love options, there is always a way to make some money in the market no matter what the market is doing. Stock traders are sitting on their hands right now while credit sellers are making good money. Last year I was selling otm put raito spreads on bullish stocks like GOOG and RIMM and this year Ihave moved back to SPX spreads. The more you trade over time, the more you learn how you have to adapt to changing market conditions. Sideways market blues? Not in this thread Phil
Greetings OC, I legged into the July SPX 1230/1245 - 1155/1140 condor over the last couple of days for a net credit $4.30. So I wouldn't be opposed to some market "summer doldrums" myself.
WOW that is a great return on margin! Nice fill! Looking at the charts they seem like great OTM points with high % of probability. I tihnk it is a good trade and you will have more than enough time to adjust even if the market has a summer hiccup. Personally I see June as being blah and the first week of July is pretty much gone with July 4th. Eexcellent trade in my opinion and great price. Your return on margin is 28%!! Phil