SPX Credit Spread Trader

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


  1. You are full of it , you know that?

    I care less what goes on in the pits. I care what goes on my computer screen. When those Aug 1400 puts trade at 19.00 x 23. 50 I feel sick. There is no reason for that wide gap between them except its human greed and monoply. Its an abusive business practice in the absence of viable competition. Its a deep moat CBOE has erected around its Castle.

    I get my experience from my trading. No one taught me that and I am willing to share my SECRETS without money and gain.

    I have busted those wide bids and ask on 8/16/2007 with that 12 contract Aug 1400/1385 spread and got out. I hope anyone reading it should do the same.
     
    #13691     Aug 19, 2007
  2. One way to 'not get robbed' is to make intelligent trades.

    I agree that SPX MMs are not worth dealing with and I trade different products.

    But if trading SPX, why deal with wide markets in $20 options when you can deal with $2 optiosn and narrower markets?

    If you trade equivalent positions instead of the positions you seek to trade, you an often get better fills. And in SPX, as you know, the public in there also. they make some pretty bad trades. If you had bid $1 or $2 or ?? for those calls, it's possible you would have bought them.

    That's one way to avoid getting robbed - try to make better trades.

    Mark
     
    #13692     Aug 19, 2007

  3. You are full of it , you know that?

    I care less what goes on in the pits. I care what goes on my computer screen. When those Aug 1400 puts trade at 19.00 x 23. 50 I feel sick. There is no reason for that wide gap between them except its human greed and monoply. Its an abusive business practice in the absence of viable competition. Its a deep moat CBOE has erected around its Castle.

    I get my experience from my trading. No one taught me that and I am willing to share my SECRETS without money and gain. I have busted those wide bids and ask on 8/16/2007 with that 12 contract Aug 1400/1385 spread and got out. I hope anyone reading it should do the same.
     
    #13693     Aug 19, 2007

  4. The SPX bids and asks have a tendency to widen on expiration day! Its because traders trying to get in and out have nowhere to go its simple human greed at work.

    I have minimized my use of SPX product. .

    RUT, NDX, SPY, IWM are all better products to trade.
     
    #13694     Aug 19, 2007
  5. ...greed is good, greed works...
     
    #13695     Aug 19, 2007
  6. zhangw

    zhangw

    Mark,

    Thanks for your quick response and good advice.

    The reason I prefer 10 contracts of 20-point spreads is to limit the risk of SPX SET. Assume in September, my short put leg is 15 point away from Thursday SPX closing price before expiration, and I know there are no big economic news and earning announcements for big companies. I decide to hold my position. The next day, SPX SET price is one point lower than my short put, and then I’ll only lose $1,000. However, if I have 20 contracts of 10-point spreads, then I will lose $2,000. I think in this situation, 10 contrasts of 20-point spreads are less risky.

    Some one told me, if you decide to close your credit spreads to take a loss as the Index is moving toward to your short leg, the cost might be less for 20 contrasts of 10-point, and it is easier to close. Is it true?

    I sold 10 Aug SPX 1400/1380 put @2.00 when S&P 500 was at 1460. Seeing the markets were going down big, I decided to hedge my position instead of closing the spreads. The Index bounced back higher; I entered the position to buy 4 Aug SPX 1460/1435 put @7.50. I think I did right to protect my position, but it was a mistake that I thought it was deep in the money and I did not close the spreads to take the big profit.

    The mistake is always the best teacher. Going forward, I’ll either to close all SPX spreads I have Thursday afternoon before expiration, or to buy some deep out the money calls/puts to protect my positions as Mark advises. Also, I might try to use RUT or stock GOOG to do some credit spreads.
     
    #13696     Aug 19, 2007
  7. I dont think i want to spend all expiratin day hitting em with ones and two to close out 500 spreads :D.

    Beside if I have to bail on a bad spread I just get as best I can knowing SPX comes with it the risk of wide b/a spreads. NDx has fewer strike choices but much tigher spreads.

    I have not given up entirely on SPX but SPX v. NDX has its trade offs or pros and cons and just depends on what position I am looking for. I do think NDX is better for FLYs.
     
    #13697     Aug 19, 2007

  8. Once again, thanks for responding to my post Optioncoach. Its a pleasure to be able t post in your journal as it will help many SPX traders. I wish I had joined here before, I see quite a number of people trading SPX.

    This technique won't work with 500 contract spreads. You would need two helpers hitting those bids and ask all day. It only works for smaller number of contracts upto 20 contract spreads.

    I like RUT and NDX, a bit more volatile than SPX , but great fills. RUT can be a pain sometime though. They have better spread executions.

    I have used the same technique there as well and it cuts like a
    knife on butter. RUT is pretty good otherwise.
     
    #13698     Aug 20, 2007
  9. Covering is best, IMHO.

    Buying those call spreads, is not 'protection'. It's just another way to close out your long DITM put spread - if you choose the same strike prices. But any strike prices do buy protection.

    Better luck next time.

    Mark
     
    #13699     Aug 20, 2007
  10. I trade the ES options. I can offset them with ES futures at expiry if the option prices are unreasonable. Aug expiry worked fine for me.

    What are the advantages of the SPX options? (not the spreads- looking at the Sep 1200 puts for example, the B/Ask is 2.25/2.40 on ES and 2.00/3.00 on SPX).
     
    #13700     Aug 21, 2007