SPX Credit Spread Trader

I do not like the trade because you got in for a better credit than I did . Apparently if I waited 30 minutes more I would have gotten such a fill LOL. Well such is life. I hold such a position as you can tell and I feel that 1250 is a good short strike given the current SPX value of 1207 and the past resistance at 1245. 5% return on a spread for 3 weeks is quite nice too.

I expect a lot of sideways movement this week between 1205 and 1215.

Phil

 

Coach,
Your analysis is good for a 1250/1260 call spread - How about my 1150/1160 put spread?

 

Oops misread the numbers lol. Yes teh 1150/1160 is about 40 points OTM with support points at 1200, 1190 and even around 1165/1170 so those strikes are good for 3 weeks left to expiration and fro a 5% return.

Phil

 

Hi Coach,

Thanks for continuing an immensely valuable thread.

When way OTM and watching the underlying, when do you recommend adding a partial hedge? I am developing my rules for trading the SPX and would really appreciate your thoughts here.

Also, do you continue to expect a Fall rally in light of all the bad news on the economy?

Thanks for your time,

modegolf

 

Mode:

With respect to hedges there are no hard and fast rules really. Most of the time I just rely on my experience and gut to tell me if I should consider putting a partial hedge on. Other times I look for a technical indicator to change to perhaps signal an adverse move. For example, I added the 118/117 SPY puts when the SPX broke down through 1220 which was a previous support in the uptrend. I had a little worry about the market continuing to drop after this support level was broken.

The hedges mainly give me more comfort when an adverse move seems likely or conditions in the market have me worried. As you can tell from the thread, all the SPY hedges were unnecessary in hindsight but putting them on allowed to rest a little easier at times and this gives me a better head to monitor my positions. So the basic rule is using your own judgements you add them when you feel they are necessary given market conditions.

Most times partial hedges are not even needed because we are focusing on strikes deep OTM which will rarely be breeched. You do not want to get into the habit to conitnually add partial hedges because you will eat into your credits too much. Wait for those times when the market really seems to have potential for an adverse move, especially if some technical indicator is giving you some signs.

The more you trade the more you will have a better feel for it. Look through the thread and read the reasonings I gave the few times I add SPY puts or calls to get a basic sense.

Sorry for the long-winded answer but in something likes this based on gut instincts, it is hard to boil down into a simple rule.

Phil

 

I am a newb and trying to learn credit spreads on spx. I saw the quote for 1150/1160 sept put as follows:

1150- 1.10/1.45

1160- 1.45/1.95

It seems there is nothing much now in this spread.

Please comment

Thanks

 

Read through this thread and you will see discussion on bid/ask spreads. It seems like there is no bid to sell the spread because of the current quotes but that is assuming you sell 1160 at the bid and buy 1150 at the ask which is something you never do. Basically you try and split the bid ask of the spread together to get a credit. Look at the position as a spread b/a which you can do at OptionsXpress, IB or ThinkorSwim and you trade the moddle or slightly off-center of the b/a as best you can.

phil

 

Coach,
After today's little surge in the SPX (1220) and increase in calls - I'm looking at 1260/1270 and trying for a fill @ .30

Looking to try and capture a little premium with just 11 markets left. What do you think?

Pyhootie

 

Any thoughts on the SPY Butterfly? 119/120/121 long put Do you just let these ride and adjust last week if doesn't look like going anywhere?

 

Coach,

I have been reading the whole journal. When do you plan to publish a book based on this one ? When do you plan to start www.PhilsTip.com ?

I have 1130/1145 bear put spread. I saw you open 1250/1260 to have it match your other 10 points put spread.

From what I read your posts, aside from margin issue, 1250/1265 seems to be better than 1250/1260. I'd get more credit and have some room for adjustment.

I'd like to run by you to see if there is anything I miss here.

Thanks
Nick