Thanks! Basically I focus on days to expiration and try not to touch the next month until we hit 45 or under. As a result I may have a dead period the last week in June and first week in July but the SPX is not going anywhere and I try to stick to my routine. June has been especially good and I expect a quiet dull July, which is even better . Phil
Phil, Lets say that based on my analysis SPX will move lower on 6-27 past 10:00est. This would be probably 2-3 day trade only . Would you buy protection first right now and write short side when volatility and premiums increase right after SPX move on Monday? Or you just put in spread at the same time ?
OTM credit spreads are not really the best way to trade a 2-3 day swing move on the SPX due to the wide bid ask spreads. Any short-term moves on the SPX is better played, as an example, going long SPY options since they are cheaper and have tighter spreads. As for when do I like to enter an OTM put spread, I do tend to wait for a nice down day to get a nice bump up in premiums for the day. Phil
Took some profit on a nice down day from the following: 95 SPX JULY 1260/1270 Call Spreads @ $0.45 Closed for a net credit of $0.30 Net Credit = $2,850 Return = 3% Only CURRENT Position: 55 July SPX 1150/1165 Put Spreads @ $0.50 30 points OTM so will watch closely on Monday to make sre we do not have another large down day. May look to add another July position for a small scalp today or Monday. Have plenty of margin cleared up for new batch of positions using AUgust expiration. For now will just continue to vaccuum dimes for July. Phil
Coach, What do you think about the July 1145/1130 Puts at ~ $.55? I'm not looking for a recommnedation, just an opinion of whether it's the type of trade you would consider. Thanks, Steve
If I could get filled @ $0.55 I would take it in a second. 50 pts OTM with about 20 days to expiration, including July 4th week. Current bid/ask for the spread of $0.30/$0.90 means $0.55 is likely fill. $0.50 may be more likely but would not go below that given the % return. Not a bad scalp for July expiration. I may look at it myself lol. Phil
I actually was able to do a little better than the position suggested by Steve due to the bigger dip in the S&P. I opened the following: Sold 60 SPX JULY 1125/1140 Put Spreads @ $0.50 Net Credit = $3,000 Margin = $90,000 ROM = 3.33% So I have two sets of OTM put spreads on the SPX for JULY. I see some initial support around 1165 or so and then at 1140. I am expecting the market to have some small bounces around this level and keep the sideways movement unless we get a real negative catalyst. A positive catalyst is welcome since I have no call positions. Oil creeping up and other bad news raining on the market's parade today, hope it does not continue Monday or I will be buying SPY puts and watching for adjustments. Phil
The SPX July 1150/1165 Put spread is currently trading at about 1.50. Could you explain your thinking on recognizing and taking losses on these spreads?
Good question. The bid ask spreads are quite wide and it will naturally look like a huge paper loss but you cannot let the emotions drive you out. That spread is still about 30 points out of the money with 20 days to expiration. That means time decay will keep kicking in faster. Also, unless we start to have a sort of free-fall, the market will bounce up and down as it finds its way. This little moves will allow time decay to do its job for me somewhat. If we have another down day Monday, I will most likely add on SPY puts to cushion the initial fall to give me some wiggle room for adjustments. I do not consider an adjustment or move until the index is about 10 to 15 points from my short strike. At that point I will decide whether to push the strikes out further or cut my losses. Since I already have booked a lot of profits for June, I can just cut my losses and get out of the position with a small loss and still have good positive returns for the month. This is one reason I like to book as many profits as the market will give me so that if I have to give one back to the market I am still net positive for the month. It is about 3:30 PM and the market has pulled back of its lows so next week we could get some sideways movement to lull us a bit. As for now, I am not concerned with the position or see the need to adjust yet. EDIT: 4:10 PM- Market has moved back to the lows at the close so today was a bad down day, but good for entry into the put spreads. Again, what happens Mon and Tues will help decide follow up action. Phil