SPX Credit Spread Trader

ChrisM · Apr 26, 2006

Quote from optioncoach:

I got my BTA in the mid 1990's lol.....
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this means we both graduated about the same time

rallymode · Apr 26, 2006

Quote from ChrisM:

this means we both graduated about the same time
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man, i feel young, in 1995 i was a freshman in HS and i had others things on my mind

El OchoCinco · Apr 26, 2006

I had those things on my mind as well back then. I still have those things on my mind. In fact right now I am thinking.... ahh I better not go there lol

Shams78 · Apr 26, 2006

Opened a June SPX put vertical today

1245p/1255p credit of .80

ChrisM · Apr 26, 2006

Quote from Shams78:

Opened a June SPX put vertical today

1245p/1255p credit of .80
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Directional bias or some more in position ?

ryank · Apr 26, 2006

Quote from optioncoach:

So if you take the lowest form and put the 100% in t-bills you make about 4.5% a year. Add using up to 40 or 50% of your portfolio for another 20% perhaps and you get close to 25% on the year. If the spreads take huge hits, you do no wipe out your account and at least have 4.5% in interest to partially offset some losses.
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I've never bought T-bills before, how do you do it using TOS?

CashCache · Apr 26, 2006

Call the Trade Desk and give them the expiration you are looking for. They will do the rest.

Quote from ryank:

I've never bought T-bills before, how do you do it using TOS?
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CashCache · Apr 26, 2006

If I remember correctly, they have a $25k minumum.

Quote from CashCache:

Call the Trade Desk and give them the expiration you are looking for. They will do the rest.
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Shams78 · Apr 26, 2006

The SPX put vertical trade is the first leg of an Iron Condor the other half being the 1375/1380 call side but I can't seem to get filled on that side today.

andysmith · Apr 26, 2006

rdemyan, I used to track Mike's Couch Potato for a short while but did not continue. I like the 7-weeks-out spreads too. How much does Mike typically collect in terms of %ROM?

Quote from rdemyan:

My initial plan is to get out of these spreads if at any time I can buy them back for $0.10 or less and assuming we are still a couple of weeks from expiration. However, i am prepared to hold on until expiration.

Two months out is because I want to go really FOTM and with bear calls the credit received is less than with bull puts. So I'm attempting a strategy that puts on the spread 7 to 8 weeks ahead of expiration in order to get more credit. To mitigate the increased risk, I'll go further FOTM and I'm going to restrict the % of my portfolio devoted to credit spreads. But I have no intention of putting on the two month out spread before the two month prior expiration. So I won't put on a July spread until the May options expire.

Do I have all of the answers. No. Do I have mounds of quantitative analysis supporting all of my numbers. No. And, let's face it the concept of FOTM really only applies at the moment you put the spread on. A week after it might not be so far out of the money anymore.

I'm just looking for a conservative strategy that doesn't require that I know with a great degree of certainty which direction the market is headed, will give me a fairly good return and hopefully cause me not to sweat. Further, I'm fully prepared to sit out if the market appears to be making a strong move up.

Finally, I do follow Mike Parnos' trades (he's been mentioned a couple of times on this thread; he has a subscription service), and he does seem to have success when he puts SPX trades on 7 weeks in advance (rarely 8 weeks). I believe in the 14 months I've watched his trades, he hasn't had to adjust once or lost any money on an SPX trade put on 7 or more weeks till expiration. He also goes quite FOTM.

I'll have to see how it goes.
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