SPX Credit Spread Trader

IB and OX and ToS will allow it but the back month will be treated as a naked option. So if you have the margin for those naked options, you can do it.

With risk-based haircut, the long options will be counted against the long to reduce the margin requirement and that is where the benefit comes in with the haircut.

 

I like your reverse vega play.

Suppose I am going to do it now.

STO Aug 1225 Put @ 7.3
BTO Sep 1200 Put @ 9.3

net debit 2.0

Case 1: Market going down at Aug.
VIX increases, and BTC Aug 1225 Put for a loss, say at that time Aug 1225 Put @ 9.3 for a loss of $2.
STO Dec 1175 Put, say @ 25 ( currently it is at 16.5).

Then follow the adjustment in your post.

Case 2: Market going sideway.
No need to adjust. Let the front leg expires, and you still have some values for Sep 1220 Put.

Case 3: Market goes up a lot at Aug b/c Fed announced no more rate hike.
Aug 1225 Put expires worthless.
Sep 1220 Put loses a lot more b/c vega decreases as the stock is further away from the strke.

So in case 3, we are losing money, and how do we adjust our position?

 

Coach,

I like to increase my leverage in order to make more $ without increasing my risk. I have been increasing my risk by trading very volatile stocks to get a good premium. It drives me crazy as I have to hedge it frequently. By increasing my leverage, and trading less volatile index like spx, I actually reduce my risk.

My understanding is that haircut is only for market makers. For retail traders, there is no way to get haircut. Am I right? If not, how can we get haircut margin, and who will provide haircut margin?

BTW, I am trading full-time.

Percy

 

welcome to the land of mean reversion overvalued puts.

 

You cannot get a haircut trading retail. For you to get a risk-based haircut, you need to go through a prop or institution.

 

Coach,

Are there any option prop firms for remote traders?

 

Today, made adjustment to existing position.

BTC VLO Aug 67.5 call @1.25
STO VLO Sep 67.5 call @2.45

Initially I was trying to sell Sep 70 but didn't get a good fill, so I changed to Sep 67.5 call to get a better premium.

Current position for VLO
short Sep 67.5
long Dec 70
short Dec 75.

 

For a list of Proprietary Trading Firms (haircut margin) try this link
http://www.utropix.com/jmowery/PropFirms.html

 

Most of the prop firms there are equity only.

 

If span margin is as good as hair cut, I like to stay retail by switching to future options.