speaking of John Summa he is giving a FREE iNetSeminar on Monday 9pm eastern and again Tues 8am..."Negative theta the silent killer" ...optionsnerd.com for info
For fun and education for myself, in my paper money portfolio I opened a May 1335/1340 bear call spread for $1.45. Rallymode really got me thinking about the 5 point spreads closer to the money. With a slight up day nearing the top of the channel I thought I would try it out (on paper anyway). I'm probably being overly aggressive going with 1335 but I thought it might give me an opportunity to try out defending the position before expiration with the continued upward movement of the market.
More background info for those that are interested: ProfitTaker has an interesting take on the article in question. Maverick comments a few posts later in his usual inimitable style. All courtesy of the now infamous and mammouth Writing options for a living thread from last year. [EDIT: I've made 300 posts now so no need to keep spamming this thread today]
Welcome: Additional details on your position would be helpful. Do you mean a $4.70 combined credit on the IC. Also, why an uneven distance between the legs (20 on the bear call and 30 on the bull put).
there were no big options concepts in what i said it was simple math, i said that you could've gotten a 5 point spread for almost the same credit at that same strike 5 days ago. You are one week closer but your risk is cut in half, how is that not better? all i am saying is that you guys need to optimize your entries and you can only do that if you divorce yourselves from this love relationships with the credit "collected". If you do that your system will become much more consistent and as time goes by you will even smoothen out the ROM curve.
great fill, i opened at SPX 1316 5 days ago and only got $1.6. On a second thought, if it was a paper trade then probably thats why, had it been real i doubt you would've gotten anything better than $1.2
Rally, I am sorry, you didn't specify in your original message that it was for a 5-point spread that I would have got the same credit. At that time I wasn't ready to enter any trade at all. Today is Friday and I felt bored and wanted to throw this trade. If I wanted to go full wave, I would have probably done 50 contracts not just 10. Just testing the water. I am still bearish but cocious. Point well taken though.
Was out all day.. sorry for the silence. I was looking to scalp some premium (my definition) for call spreads when we were up since it looked overboughtg and had orders at 1360/1365 sitting all day, even down to $0.20 and no hits. I have been looking for a put or call spread the past two days and not getting filled lol (for prop). Oh well, went long some ES in the morning and short before lunch and that gave me my action for the day. Then was out enjoying the beautiful weather!
Ryan, Rally's trading at the top of the channel is great but I would be careful and I would match this wonderful concept with an overbought condition. Otherwise, if it breaks out the channel you don't know how high it can go.