Trading the SPY as a newbie?

Discussion in 'Options' started by BlackAces, Nov 12, 2009.

  1. bc1

    bc1

    Hello Pelagos. I'm just wondering what trading system you are using if you don't mind sharing. Do you get exercised/assigned much? Thanks.

    It didn't take me long to get tired of the daily market chop of the UL price while a monthly option sits there tying up my buying power. So I switched to weeklies. Tried the SPY but then I can't afford the stock if I get exercised so I switched to the SPX. Tried the RUT but the gap up and gap down problems on the Friday AM/morning close wasn't worth the risk. So far from doing the weeklies on SPX I have a 58% ROI on my little account. Because the SPX monthly is an AM close like the RUT, I use the SPXPM for that week which is a PM/afternoon close so I have the extra day to trade and deal with the price gapping. Longest I have a trade open is 7 days. Once I decide on a direction for the week, either the prior Friday, or Monday, or Tuesday, I try to hit the peak of a rise or fall and basically leg into an Iron Condor about $25 to $30 OTM each way. Maybe make another trade or two in the middle of the week(Wed or Thurs) when I have a better idea on direction and then use the remainder of my buying power for all day Friday to trade around where the close may be going with NTM trades. I'm at 88% on winning trades and shoot for $1.00 to $2.00 of credit for every $10 put at risk until Friday when I take down to .50 or so for a little scalping. With last friday being a quad close I was worried about a large movement in the last hour so instead of scalping the close I just traded/legged into an IC for next week with a 1190/95 put and a 1245/50 call credit spreads for $3.30. I'll see how it goes. I'm always looking for a better system as I gain experience and more bux to trade.
     
    #21     Dec 18, 2011
  2. Pelagos

    Pelagos

    I can't disclose what I am doing but can say I am a net seller and hold my positions an average of 2.2 days. My system makes all decisions, 2.2 is just the average the market gives me. My margin per trade is high so if assignment happens it is not a problem. I unwind my positions with plenty of time value left so I have not been assigned yet, nor do I find myself trading on expiration day. I move to the next week or month before expiration day arrives. I enter or offset the entire position as one trade never leaving a leg dangling.

    Gaps can be a problem. I continue to run test trades looking to improve this and improve the overall efficiency of what I created.
     
    #22     Dec 18, 2011