Phil, The bear put spread from a couple of days ago -- 1265/1275 at $1 (0.95 for you) is trading at $0.65 -- and that's only four days after it was put on. Under what circumstances would you take a profit like this off the table -- it's tempting.
I do not have such a position. I recently added the SEP 1165/1175 Put Spread which has not reached any profit level. Phil
Sorry -- that's what I meant -- the SEP 1165/1175 put spread for 0.95 cents credit, from 4 days ago is trading for $0.60 right now.
I see a current BID/ASK spread of $.30/$1.35. Do not see how you can get out for $0.60 debit at all. There is still 36 days or so to expiration so there is enough time value left to make getting out for a profit quite difficult. I would only consider getting out if I can get at least 60% credit but that would also depend on how much time to expiration. For example, for now I am content on letting my AUG positions expire worthless given just over a week to expiration. Phil
The mid was $0.60 (according to the thinkorswim platform) when I posted it, at which time the SPX was 1231 or so. A couple of minutes later, the Fed announcement caused SPX to go to 1234 or so. Surprisingly, the spread price wnet to $0.90 instead of going down (IV?). Now with SPX back at 1232, the spread's mid is showing 0.85.
Ok, I did not see that at OX but I think it would have been hard to hit it right at the middle. WIth SEPT expiration, I would hold on for more profit since the strikes are still sufficiently OTM. Phil
Coach: I was filled on the following trade today: SPX Sept 1285/1300 bear call spread at $0.80 I would like to have taken the strikes out further but the next strike is 1325. A 1300/1325 bear call does not fit in (from a maintenance point of view) with my existing bull put spread which has a 15 point spread. I find this frustrating. With 5 weeks to go, it's time to start looking at Sep spreads. I'm not overly concerned about the strikes I've chosen, but I would have given up some credit to go out further. But there was nothing to select from. Is there any way to get the MMs or whoever opens puts and calls to open a new strike price (in my case say 1305, 1310, 1315). I'm looking to place another bear call spread but I want to place it even further OTM. Also, I've kind of noticed that the more time there is to expiration, the more likely one is to get filled at the midpoint. The b/a when I placed the order was $0.35/$1.30. I got filled by OX in less than 5 minutes.
Hi Phil, Can you just clarify whether you prefer 5-point spreads or 15-point spreads? Are you saying you prefer 5-point spreads but only if they are further OTM? The 5-point spreads will limit your maximum loss right? But of course the trade off is you get lower premiums. You said in an earlier post that with a 10 to 15 point strike, you normally roll the whole spread if threatened because it is cheaper to do so. Under what circumstances would you roll just the short side and leave the long side alone? Do you do that often? Thanks
As the current month approaches expiration and/or the market moves higher, the market makers may add more call strikes on the high side. Remember that the market maker does not want to add super OTM strikes which people will just sell and have a large possibility of expiring worthless. 1300 is about as high as they are gonna go now with 15 point strikes since that is quite a large move away from the current strike price. So there is nothing we could really do to have the deepest OTM strikes we want unless the market moves higher or volaitlity picks up. Phil
I do not have a specific preference for any spread between the strikes although I mainly focus on 10 and 15 point spreads. 5-point spreads are harder to split the b/a at times and also reach maximum loss faster on a large price swing. 5- point spreads do not necessarily limit your loss more so than a 10 or 15 point spread because most people use the same margin amount and simply sell more 5-point spreads. If you are gonna do a fixed contract number no matter the spread then of course the risk is lower but so is the premium. This is the normal risk/reward trade off that each trader has to analyze before entering a position. I personally feel I have more flexibiltiy with a 10 or 15 point spread since I can either roll the whole spread up or simply move the short strike up. What I do depends on the the premiums for the strikes and which action would lead to to the best adjustment for me. I do not have a preset rule on which I would do first. As always, it requires monitoring the market and the stirkes to make the adjustment when necessary. I rarely adjust because my goal is try and select strikes which are expected to expire worthless. However if I must, then it all comes down to premium and time to expiration. A lot of it comes from experience and familiarity with the strategy to make such a determination, not to mention personal preference. One is not more right than the other. Phil