Sigh. By choosing to trade a less competitive product like SPX, you receive less compensation for the risk you take. Indeed, after that bought-back-a -deep OTM-spread-at-25-cents-and-at-the-same -time-write-a-less-OTM-spread-at-15- cents-fiasco, I thought the lesson would be obvious. Clearly you and your students should be trading something more competitive It would make much more sense if you as a so-called guru would admit that perhaps you need to do further research so you have a better idea which products have better executions/better liquidity. But you choose to go the"I'll stick with what I brought to the dance approach", an obvious appeal to precedent. And also a bad way to trade.
I am not disagreeing with you for the sake of disagreeing. But as a self-proclaimed expert (book, radio show, handle as "option coach"), you really should be more prepared to deal with criticism (handling praise--anyone can do that!). I think you are doing yourself and your readers a disservice for (1) understating the risk associated with the strategy; (2) failing to consider that the strategy could and would be a huge loser in the case of gap move and rising volatility. You may THINK you have addressed these adequately, but I don't think you have. In this low vol, dull market, credit spreads have been easy money. But that will change--it always does! There are enough self-proclaimed experts--seminar speakers, book authors, service sellers, system writers--already on ET. Some are good, but many, many of them are overrated. I have read this thread since you started. You seem like a genuinely nice, if not thin-skinned, guy, and I think you really want to help people. That said, you really need to do some more homework before you give out any more advice. That is my opinion--take it as you wish. I wish you no harm. Best, synic
And what is your suggestion for "products (that) have better executions/better liquidity" that would be preferable in this strategy and why? Chip
Smiling: I just want to say a few things: 1. I can deal with useful criticism. Your comments merely criticise the trades wihtout offering any alternative. How useful is that? If you have something to offer than please do. But to sit back and say "What you are doing is wrong" does not help anyone or any readers of this thread. So do not say I cannot handle criticism. I actually told you, the criticism is fine if it adds something to the discussion. Yours did not except to say the risk is too much or the product is wrong. But you stopped there. No one here gains from simply shouting from the sidelines. Notice all the questions you got back to elaborate more which you ignored? 2. I never understated the risks of this strategy. Please find a post where I brush off the risks of this strategy? Please show me how the SPX will gap down tremendously or I have dismissed this as a consideration? Even after 9/11 the index did not gap down like a stock like GOOG or BIDU gaps down. I have discussed the risks repeatedly and mentioend this is not a beginner strategy by any means. If a reader thinks this is not a strategy with serious risks, how much more can I make it clearer. 3. You have a negative view of credit spreads. Credit spreads can be traded in neutral, bullish or bearish markets. So since that is the only 3 markets that can exist really, how are credit spreads not effective just because the market is no longer dull? YOU said credit spreads were easy money in your comments. I never said credit spreads are easy money. And credit spreads are like any other strategy. It makes money if applied correctly and you follow good risk management. So why do you claim that one cannot trade credit spreads in bullish or bearish markets? 4. I am no self-proclaimed anything on here. I have nothing to sell here. Please re-read the thread and see how I barely mention my book here. In fact, my book does not cover this strategy at all and I have told people not to buy my book looking for details on this strategy. So do not lump me in with those on here trying to sell stuff. My thread and show are all free, no purchase necessary. 5. You are telling me to do my homework. Thank you for the advice. So far you have not provided any contributions to the discussions beyond the criticism. I actually would welcome your contributions. I have been making money in the market for years and I do not mind if people tell me my way does not work the best. I am sure there are so many different ways to make money, you cannot imply that you know the best way. The strategies are meaningless. It is the risk and trade management approach that counts. So I take no offense to anything you have said although your comments seemed to imply I did not know what I am doing and I do take offense to that. Otherwise you made your point and no need to take away from the thread subject matter any longer... Phil
Well said, Coach. Let's get back to the business at hand. I thought your were looking to place trade(s) today for October. I'm interested to see what you suggest. I've already got three of my own ICs for October and thought I would wait for your suggestion. Today's Friday and a fairly good up day. Probably a good day for a bear call spread deep OTM.
Your response is one giant straw man. You are simply distorting what I said. Arguing with you is a waste of time; your mind is already made up (sorry that I confused you with the facts). Btw, credit spreads are not a bad strategy. But you put them on with so much size/leverage you are courting disaster. I cannot believe you haven't picked this up already. Overleveraging one's capital with deep OTM credit spreads: 90% winners (one month at a time), 100% losers (one career at a time).
Just avoid the thread so the rest of us can focus on the topic. It is not a strategy for you. We understand. Thank you Phil
Hi OC Wow, that is some kind of deep OTM strikes I can see why you only adjust 1/6 of any given year. That being said there many ways to skin the Gato, as it were. Options are flexible; one should always use them in such a manner. Re my .55 credit post: There many many ways to put on +theta positions without doing it robotically, mechanically, and without being "naked" or without taking on additional risk. No time to give lots of examples. One of my current positions Oct SPY call credit .55 127/129 Oct SPY put credit .40 120/118 These are all legged over many days with no greater risk exposure (most of time less risk) than a putting on a straight IC or BC or BP mechanically due to my Sept long Gamma that still existed until today. Very simple stuffâ¦..all without costing more or demanding more prem from ones account. Regards, Doc Z.
Thanks for the examples. I just personally do not want to leg into these positions like that as I feel I can get whipsawed legging in the wrong way. For example I would not want to take on the margin of opening up with the naked call or put first and waiting a few days to leg in. I am not saying it is not a viable approach at all, just not within my comfort level of timing those leg entries. I would rather slap on the entire spread and be in at once. For me it is harder to try and time the legs correctly. 127 would make me a little nervous if we breakthrough the 1245 resistance but I still see plenty of storng headwinds against anupward move. Changed circumstances from the Fed and oil dropping may provide enough thrust to break that. I use the E-mini for my intraday swing trading . Phil