SPX Credit Spread Trader

yep,

its like a credit fly. LOL If we get down to 1100 i can easily close the flat position for $1-2. If you look at the the july 1240 ES puts and july 1240 SPX puts you can see the potential.

 

Coach, I'm looking at a put spread in this region too... but I gotta say, without knowing how Israel's neighbors are going to react, aren't you taking a bit of a chance here?

 

Coach, when is an optimal time to put on a prego fly?

 

Best lotterty tickets are the ones that someone else pays for.

I am actually hoping that at the close of trading on Friday next week, the market is pegged at 1200 ....

 

i am sure you will do just fine with your challenge at the moment. i was just surprised why the guy didnt go flat on his position by covering with SPX options or simply buy the SPX strike instead if it was a new position. You dont get to put these positions off the floor often. LOL

 

The only time a PREGO FLY makes sense is if the net dbeit of the FLY is an amount significantly less than the cost of closing out the position and you feel strongly that the market is going to keep moving towards and past your short strike or, better said, will hover in the FLY profit zone.. Instead of closing the spread for a huge loss, you lock in a small debit loss with the potential for greater profits if the market moves into the FLY profit zone.

It is something to be used only in case of emergencies when no other adjustment is as appetizine or when your analysis now tells you that the FLY has a strong chance of being profitable.

Not an easy adjustment to do and I still have not used it yet. I do always price it when analyzing my open positions but it works better if you originally recieved a nice big credit and expiration is close and the index is moving into the profit zone.

 

The closer it comes to your short strike the more it will cost?

 

Once the FLY is opened, you WANT it to move to the short strike and just die there... . But when opening, you want to see what the FLY profit zone will be and determine if the index has a good chance of ending up in that area for a nice profit before considering the PREGO FLY.

 

Coach,

Are you still playing the VIX options as cheap insurance on your bull puts?

 

No I closed out the last options I bought some weeks ago. I cannot really buy enough for a good hedge wihtout eating into my credits too much so I do not want to buy them regularly.

I may do some more for my new AUG SPX position if VIX dips again though.