Hi guys, I had a call spread out for SPX Oct. 1370/1380 calls and for some reason instead of expiring worthless...I had to buy back the SPX 1370 calls for 1.12? Any ideas why this should have happened. I assumed they were worthless because the SPX range for Friday was 1362-1368 and it opened at 1366 so tell me how 1370's had value? Thanks...and no this is not my first credit spread.
Didn't Coach go over SET with you? Coach, where the hell are you? Your students need a refresher course in SET!
Fill me Maverick with what you know about SET. I thought the "set" price was based on Friday's am open...but obviously I'm wrong. So fill me in.
No, that is incorrect. SET is a special opening rotation procedure where a hypothetical index price is created from the opening print of all 500 companies in the SP 500. I say hypothetical because the price does not exist except on paper. In real life, all 500 stocks don't open at the same time. Therefore, they are creating a hypothetical value of what the index would be if all 500 stocks did open at the same time. In many cases, the SET price can be much higher or lower then actual prices that traded that day. Back in Nov of last year, SET on the SP 500 was 10 handles higher then the actual high that was traded that day. You should never hold a short option into SET if you are within 10 to 15 handles of the short strike. That is pure gambling.
Hi Guys, A trader friend of my explained how SET was determined so I'm clear now as to what I should have done differently. Thanks for listening I didn't mean to whine. I've learned a lesson and fortunately it didn't cost too mucy. Happy trading all...