I am just getting started developing my system for Credit Spreads on the SPX, but I am using between 40 and 50 percent of my "SPX Trading Capital Allocation". This allows me to both defend a position if it goes against me, and have the necessary capital to put on the next moths positions without having to bail out of the current month. I am sure there are other ways to conquer this problem, but this is working for me at the moment. Also, I finally get up to speed on credit spreads and you guys change the channel to pregnant flies, baby files, adopted flies, bastard flies, etc... What gives??? -Cash
Well its sweeps week so we are trying to keep the ratings up! Adding a little diversity of different ways to trade the SPX with spreads . Of course a godo JA pic keeps the ratings high but we do not want to offend Donna
Use Stochastic, Moving Averages. You need to be able to hide your short above Resistance (calls) and below support (puts). Like today is a good day to get some calls. Dow is overbought. I don't care about Bernake rally, I short the Dow. Time is on my side; I have 35 days to be right. The market will pull back because the Dow went to far too fast and S&P and NDX lagging. I am looking at getting OEX 595/600 or 600/605. I am not sure yet.
This is an update of my RUT trade per your request: 10 RUT 770/780 for $1.00=1000 This morning I bought 8 IWM 74 @ 0.45 for hedging $1000.00 RUT Credit $360.00 IWM hedging => net credit 640.00 I will take the small profit anytime if I can reduce the loss possibility. For now both are in the money. I started only with 10 to test RUT. It seems pretty wild to me.
I don't mind although an occasional "hunk" pic would be appreciated by ME...but I think we need to take a poll to have you start a NEW thread on B-FLY's....how abt it guys and gals?
I am not apposed to learning new things in this thread. How about if we watch what Coach is doing, and if it pans out the way he is predicting, then we decide if a new thread is needed. I for one am somewhat confused when it comes to all these flies (almost need a fly swatter), but love the fact that I may be able to learn something new. You don't suppose we could catch a disease with all these bugs do you? However, credit spreads on the SPX is my primary focus for now. -Cash
Well the SPX FLYs could be an additional way for me to trade the SPX while watching the paint dry (theta). I was able to put on both FLYs for just over $1,000 and can possibly mine the cost back from them selling the BABIES as the SPX moves around. I have been studying it a bit after reading Cottle and taking an example he had to another level. It should be quite interesting to follow along. Bottom line I can make some money off the bouncing around and add to my credit spread income. If it proves interesting I may start another thread for INDEX FLYs My other Combo to Fly trades are on riskarb's thread so I will just continue to post along there.
I decided to play along on the Fly trade... never done one before so this is dumb money looking for an education. Bought the March 1225/1250/1275 for $3.50 -- felt like I overpaid at the time but what else is new. The fill was interesting as I got a "discount" on the 1225 -- the one least likely to be ITM -- and paid up for the rest. Prices -- excluding commissions -- were: 1225: $2.60 1250: $6.10 1275: $13.10 If my math is correct, it looks like the max reward is: 1275: $11.90 1250: $12.20 1225: -$2.60 Total: $21.50 or a r/r of 6.1 before commissions. Of course, with everyone breathing hard over the Fed testimony, this stands an excellent chance of blowing chunks but we'll see.