SPX Credit Spread Trader

Eric99 · Nov 28, 2006

Murray,

Can you elaborate on this conversion? Are you talking about selling the long-dated put and building a butterfly around the existing short?

andysmith · Nov 28, 2006

Did you get a chance to get started with yesterday's big down day?

Quote from RichardRimes:

.....Currently I'm working on doing condors and B-fly's on the SPX to act as hedges for the OTM IC's, but you have to have some market cooperation!!! ie one or two down days a month

GL!
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RichardRimes · Nov 28, 2006

Quote from andysmith:

Did you get a chance to get started with yesterday's big down day?
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Yes I did...title is "butterfly's can be free" actually I morphed from a previous pg. OTM b-fly to a (sorta)CTM reg B-fly over the past two days for a nice credit! yea...

ryank · Nov 28, 2006

Quote from Sailing:

Ryan,

Have you or did you consider locking in the Put Side profit using a butterfly? The suggestion here allows you to lock in a profit... on the Volatility spike from Monday.... and then either hold for a chance at a huge return (price settling within your fly) or adjust back into a diagonal when volatility settles down again. This would be VEGA play on the spike from Monday.....

Just a thought.

One of our trader's last month locked an Iron Condor into two (both call and put) butterflies for a 8% profit.... and then as the market moved up.... the next two weeks... into expiration... felt no pain, and in fact, was cheering the market to move up just 10 more points for a huge return.

It was very interesting to see his 'trading style' change knowing his profit was locked...

Murray
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I didn't look at doing that, just was trying to lock in some profit and move onto next month. I've been gone all day and this is my first look at the numbers for today, but I don't see how I could lock in a profit on the puts with a butterfly with current quotes. Maybe my tired mind is missing something.

yip1997 · Nov 28, 2006

I wonder if anyone has a model how IV might change with change in the underlying. Any model for spx? Any suggestions?

ChrisM · Nov 29, 2006

Does anybody have VIX options/VBI futures prices from recent drop May/June or know where to find it ?

jamesbp · Nov 29, 2006

Hi guys (and girls)

First post, so hope it gets through ok.......

I have been following the threads on ET for a short while and now feel comfortable to get more active and involved in the discussions ......

I generally trade Diagonals and 'risk managed' short premium strategies....

I understand the principle of locking in profits, but can you please explain a little bit more about using a butterfly or similar to 'lock in profits' on an IC and then riding it out to expiry

Many thanks
James

ryank · Nov 29, 2006

Looking at the prices today I might be able to move the Dec into a butterfly and lock in a profit. Combined with my call diagonal I already closed I would be around 4% for the month. I can then look for Jan/Feb positions as my margin will be free.

ryank · Nov 29, 2006

Quote from ryank:

Looking at the prices today I might be able to move the Dec into a butterfly and lock in a profit. Combined with my call diagonal I already closed I would be around 4% for the month. I can then look for Jan/Feb positions as my margin will be free.
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Thanks for getting me thinking that way Murray . I locked in a profit of 4.8% for the month (have my butterfly lottery ticket if we drop to 1350 at expiration, I think 1450 is more likely ) . Would have been greater if I had gotten a fill on Monday to close out the diagonal but you can't win them all I guess. Now I will be looking at Jan/Feb positions to see what I find.

TrendSailor · Nov 29, 2006

whoo hoo! SPX up nice today. Just picked up a a modest number of simple credit spreads at the SPX CALL 1435/1445 for a .40 net credit.

Going to try to build up the position with higher premium now and more contracts.

TS