SPX Credit Spread Trader

Discussion in 'Journals' started by El OchoCinco, May 17, 2005.

  1. \

    No sir, once again you fail to see the point here. I suppose 200 pages filled with fawning support about a strategy that more experienced traders cringe over will do that to a person.

    Again, do you believe that you are experienced enough as a trader to manage these positions in a more challenging market (to premium sellers). Did you trade these positions prior to 2003? Why did you not know the appropriate hedge ratios for ES to OEX before someone on this thread calculated this for you?
     
    #1201     Oct 17, 2005
  2. I am more comfortable with this approach. I can go months and months without ever making adjustments or having the market swing close to my short strikes so selling the spreads month to month allows me to bring in income month after to month and reinvest it. Buying spreads is more akin to waiting for the big move to occur and I just prefer this approach as far as keeping my income reinvested.

    Time decay is relevant because despite being a spread, the spread does have a significant rate of decay in the last week or two. Time decay affects both positions the same since the spread has a net theta. One is a debit and one is a credit so theta helps one more than the other over the course of trading this way over the year.

    More importantly debits are out of pocket money. Credit spreads allow me to have 100% of my money invested elsewhere earning interest or dividends while the positions are in place. Debit spreads means the same amount of money minus the debit only can be invested. Over the course of the year it could mean an additional couple of % in returns. It is something I like that makes me choose one over the other.

    I am comfortable with this approach so I do not mind the 1 or 2x a year I have to make adjustments. Stress is all part of trading and I have to accept it as a price for the profits I make.

    But others may want to investigate doing it and see if they prefer that approach. I do not see one more right I just find the advantages of credit spreads in this case to be preferable for me.

     
    #1202     Oct 17, 2005
  3. B5476

    B5476

    Who/what got your panties in a wad, amigo? Coach has been nothing but nice and helpful for people who are interested in this strategy.

    Why don't you try being constructive?
     
    #1203     Oct 17, 2005
  4. Well you seem to speak for the more experienced traders in knowing for a fact that they cringe over this. I have yet to hear the definitive word that all more experienced traders cringe over this.Again, not much of a contribution. No one here is fawning, as this thread is filled with those that like this strategy and those that do not. I guess when someone makes money it bothers you since you do not like the underlying strategy. If you bothered to read anything here, no amount of losses could ever wipe me out because I only use a portion of my capital in these strategies. But you skipped that part.

    I appreciate you concern but your condescending tone does you no justice. Do not worry about my experience, I worry more about yours in jumping into someone else's thread and giving criticism with nothing esle to add. As I have said before, criticism withou substance serves no one.

    And finally what on earth are you talking about ES and OEX? I do not sell any credit spreads on the OEX nor trade the ES against these positions. So why would I need any hedge ratio?

    You are free to ignore this thread since it does not suit you.


     
    #1204     Oct 17, 2005
  5. Agyar

    Agyar

    Hey Mav, this reminds me of something I remember reading that you wrote once. The more times you have to adjust, the worse off you are. The more transactions you make, the more transaction costs/spread costs you have to pay. Unless I am misunderstanding your debit/credit question, I think this gives the advantage to the credit spread.
     
    #1205     Oct 17, 2005
  6. Maverick,

    The name says it ALL...:D :D :D

    He is a brilliant trader from what I can tell but he is moody at times too.... lol.
     
    #1206     Oct 17, 2005
  7. its all about how u want to get paid. Credit spreads 2 steps forward, occasionally 10 steps back . Vice versa for long juice strategies. Problem with first is if you get whacked on your 3rd month after starting vs the 30th month-you won't have that cushion to tide you over. Condors have poor risk reward, but neg payoff is rare.With long juice, you can amortize you equity bleed. I've seen traders blow out /do well on both. Just like anything-it depends on traders psyche.
    Don't get me started with Mav... LOL
     
    #1207     Oct 17, 2005
  8. Maverick74

    Maverick74

     
    #1208     Oct 17, 2005
  9. Maverick,

    You start the contra journal.... this is getting interesting now!

    Phil,

    Could you do me a favor and just tell me the current positions opened.

    Thanks!
     
    #1209     Oct 17, 2005
  10. Why don't you answer the specific questions sir? Did you or did you not trade these spreads prior to 2003? Did you have one of these positions on in October 1998, October 1997, January 2001, April 2001, July 2002, October 2002, March 2003, etc, etc?

    You may feel that this is not a contribution to this thread, but you are very clearly mistaken. Since the majority of your followers did not trade these spreads prior to the last year or two years, it is clear they have no clear concept of what occurs in illiquid fast markets in which a half developed hedging strategy will not work.
     
    #1210     Oct 17, 2005