Who is trading SPY regularly? Questions ...

Discussion in 'Options' started by Bushwacked9, Nov 1, 2019.

  1. Anyone else out there trading SPY as one of their mains? I took a beating the past few weeks on it ... first time with SPY through the major ER quarterly. Learned my lesson to be careful during this time as all my trades were going well until now, then they all flipped and went to crap real bad, real fast.

    Anyone who trades SPY regularly have any thoughts on this or how to handle it? Most of my stuff was Iron Condor's around the 10 delta mark (~90% OTM) so should have been reasonably safe ... I thought.

    Up until the past 2 weeks though, I was hitting my trades well. Chalk it up to a bad month and keep on keeping on with my 10 delta strategy or possibly adjust since ER's seemed to beat it down pretty bad?

    I normally have a few options in the ~30 range and ~60 day range, plus I do like to dabble in the weeklys to see about making some smaller quicker gains. Although, the almost 1:5 ratio I am not a fan of since I am smaller trader and normally carry about 10-15 contracts on SPY for each trade ...
  2. I don't trade SPY, but do trade SPX. The IC's I examined have negative expectancy, so I don't trade them. Curious, why you are not trading SPX instead of SPY, if you typically have 10-15 contracts! -- will save on commissions and have better tax impact.
    tommcginnis and Stamamarti like this.
  3. negative expactancy ... where did you see that?

    I looked into SPX, but when I got ~60D out ~10 delta, I am looking at a 1:9 ratio almost for the max P v max L. Yes the contract pricing would be better instead of blowing $52 every IC on a 10 contract play I would only spend about ~$15-20 on SPX due to higher price. However the P/L ration is about 1:4 on avg for SPY ...

    Am I missing something ??
  4. SPY and its options is the only thing I trade.
  5. Good to know ... But any thoughts on OP? Also how long you been trading SPY?
  6. imjohn


    Volatility in the S&P has been in decline for the last 3 weeks. RTH ranges are shrinking and VIX is collapsing. Could be mere coincidence for to your strategy. Perhaps review how your strategy has performed historically in different market conditions (low v high volatility, low v high daily range) and maybe you will discover some filters to keep yourself out of the market when conditions aren't favorable.
    tommcginnis and Bushwacked9 like this.
  7. Maybe the past couple weeks with earnings beats all over effected more than normal... It was making wild $1-1.50 jumps at different times for some of my options ending in 1-2 minutes.

    I do need to test my strat in more scenarios ...
  8. destriero


    Risking 8:1 at can wipe out a year's gains and 60D doesn't allow for the compounding needed to withstand the inevitable f*ckage. The mistake was selling stops into major tech earnings.

    Learn to trade local vol (within +/-30D strikes) and don't refer to shorting stops as trading. You're in disaster re.
  9. Yes .. and that is why I'm not doing 9:1 ... 1:4 is about as risky as I'll go ...

    I've been trying to stay heavily in the ~30D range ... But not sure what you mean by the last part of shorting stops and disaster re
  10. tommcginnis


    • Expenses are 100% guaranteed -- trade the SPX.
    • A 10 delta on an IC means a 20% chance of ITM finish -- but a 40% chance of having one side go ITM at some point. Find out why: P(touch)... Trade accordingly.
    • Most of what has moved the market over the past year has not been economic fundamentals, but non-market shocks -- these are not predictable. Trade accordingly.
    • As noted above, volatility has swung down over the past 6-8 weeks, and has had such swings through the past 18-24 months. (Since the vol desert of 2015-2018 ended.) Trade accordingly.

    Trading ICs implies being glued to selling both sides simultaneously. Given the points listed, you may wish to alter that view.
    #10     Nov 2, 2019