phil, good point. It's a strat i favor actually and i havent talked about it here, but due to its gearing(i prefer them slightly OTM, slightly upside gamma) i reserve it for strong reversal signals. I also look for nice skews. So major indices are pretty much out. Normally, I'd rather do a simple vertical when not real sure on direction and/or adjust to a ratio spread later on to match signal strength. As a matter of fact, i was doing this same strat in the bull market in 99, ratio spreads on high tech names on extended rallies and convert into credit flies on pull backs. Call it crazy but my equity portfolio almost blew me up(brand new trader) if it wasnt for my options positions. Lotsa juice back then. Not so much anymore. For obvious reasons, i rarely do the put side unless i can do them 20% OTM as pure vega plays just like we discussed not too long ago. Admittedly, i've been experimenting with exotics for these "call the market top" scenarios, so soon i may not do any more SPX credit spreads. Just my 2 cents. EDIT: i think i tried to cram too much info in 1 post.
Haha, not exactly a huge rally but enough to put my position at a 16% loss. I still think that will be lower than 1335 on the december contract by october expiration, but better start managing the risk. I'll go delta neutral using futures at 1330. For about 20 days, this will put a cap on my maximum loss to about the same level as today. If by then we are above 1340, I'll close everything and be not worse than today. If we go down, then remove the hedge and go back to the original play. This is of course, not counting volatility. A 5% decrease will widen the max loss to 24%.
Poop! Took my first stab at a put diagonal and blew it. Lost approx. 2G's including commish. I sold the Sept. 670P and bought the Oct. 660P on the RUT. It went north and my $'s went south. I had $7250 locked up on a call credit spread which went south along with the put diag. Poor entry timing, I guess. Back to the drawing board and the virtual trader for alot more practice. Bob
Collect cash credits instead of paying debits and you will make a profit if the market runs away from your strikes. Mark
Now you tell me lol! I went into the weekend really strong and gave some back these last 2 days. I should still end up around +2%ish on my diagonal positions. Actually closed out my low end today just under b/e, making money on my middle puts and upper calls right now. Looking for 1 more up day and might close those out or make some kind of move into October positions with them. More than likely start fresh with new Oct positions.