Okay you professionals that contribute to this thread, here's a question for you. The Nov 1120 just got added today. I'm trying to place the following: Nov SPX 1110/1120 bull put credit spread for $1.00 Here are the bid/asks for each leg: 1110: 2.75/3.40 1120: 0.00/0.00 I understand that the 1120 was just opened and no b/a yet. That's why I placed an unreasonably high credit amount of $1.00 to see if I could get a process started so that I could then adjust the amount. But nothing is happening. Why doesn't the mere prescence of my order start to generate bid/asks on the 1120.
Greetings JET Welcome. If you don't mind.....why do you prefer the diagonal verses the straight vertical? I know that it eliminates your vega risk but are there other reasons? This would be more of ratio write to make that a credit ...yes? Do you ratio to vega neutral? If so then how do you maintain your credit. Sorry....I'm surely missing something simple here. Also, when your front short strike expires do you roll into a vertical then? Or do you lift your long strike too and make another diagonal? Thanks
And to add another question, if you ratio the spreads to make a credit, isn't the margin requirement really high?
No, you have to trade same strikes for synthetics. To complete the box, flip the strikes and change the puts to calls. In other words, selling the 100/90 put spread should be the same as buying the 90/100 call spread.
OX cancelled my order because there is no b/a on the 1120. They are calling down to the pit to request that the process get started (I'm vague because I don't really understand the nitty gritty of how that works.). No guarantees so they tell me.
Or you don't ratio write at all and your credits pile up in subsequent months on multiple rolls. Your long strike is 2 or 3 months out. This is more likely. I knew was missing something simple.
lol, I'm gone for 2 days and all hell breaks loose on this thread but we've seen this all before...yawn. I know the question wasn't directed at me but I put on diagonals 1:1 due to the margin requirements you allude to but normally look to get it done for a very very very very small debit or scratch if I do it. Obviously this intial position is long theta and vega which is nice. If I end up rolling the short leg to the back month I find I get a better return on margin than If I had done a straight vertical. I normally look put on the diagonal about 40-50 days from back month exp. Before this gets pounced on, anyone with half a brain will be aware of the risks involved in this strategy. Under most circumstances there is no statistical edge to it lol. Momoney.