Posted by mirhamedali on 12th of Sep 2022 at 03:10 pm
I do the same thing DigiNomad: use TA to lean in one direction
while opening spreads.
I like to open credit spreads just because my downside risk
is capped, plus I think the margin requirement is lower since I am
taking on the credit. I agree, its good to have a system
where you can win in 3 of 4 scenarios, 80% of the time.
I open 2-3 month long spreads and usually close them out in
about a month ... depending on where we are in the elliott wave
counts. I find its not worth holding all the way
You can make more with spreads than with the indexes
themselves
Posted by mirhamedali on 12th of Sep 2022 at 03:14 pm
Have you guys looked at Ladder credit spreads? You are
basically adding on one far OTM option to cover the possibility of
a surprise move in the wrong direction.
By doing a ladder you can win no matter which direction the
market moves ... all you need to bank on is the market moving at
least 3 % up or down - a flat market is no good.
Posted by mirhamedali on 12th of Sep 2022 at 11:52 pm
@tmbrook1, here is the example you requested
This is on QQQ. First image is a normal Bear Put Spread,
2nd one adds a 385 Call which is just $0.21, so its dirt
cheap insurance in case the market moves against me. Even if
the market goes up 10% my loss is almost zero.
But as you can see the insurance starts losing some juice after
about a month, but its best practice to exit spreads early (at
around 50% of max profit).
As an advanced tactic, if the market moves against you then
you can sell that OTM call if you feel the market will come back in
your favor thus banking some profit in the interim.
Posted by bpozdoll1717 on 13th of Sep 2022 at 08:11 am
Plus seems like the big boys have advance knowledge of a good
CPI. No way they run it up to a key announcement without some info
leaked. Expect a lower CPI.
Posted by DigiNomad on 12th of Sep 2022 at 03:52 pm
Ladder happens naturally if you're watching the market daily and
doing credit spreads on both sides of the market (selling calls
spreads wehn overbought and put spreads when oversold).
I tend to sell options with around 45 days to epiration and
they are always out of the money (no more than 20 delta when sold).
Given these parameters, I'm not sure what you mean by "flat market
is no good." I would LOVE a flat market right now. Although,
you want the vol to be high when you enter the trade, you WANT it
to collapse after you're in (with credit spreads)
Posted by mirhamedali on 12th of Sep 2022 at 04:50 pm
I dont want the market to be flat so that I can exit the trade
early. I rarely hold to expiration. I normally exit
halfway through. I end up making more on a per day basis that
way.
You are right the ladder can happen naturally if you are
opening trades on both sides, that's a cool approach. But
then one trade may be a loser. However with an actual ladder
each of the trades can be winners.
Posted by DigiNomad on 12th of Sep 2022 at 09:43 pm
I only trade SPX options in taxable account and SPY
options in retirement accounts (better liquidity but I have to use
more contracts). Since I've focused my efforts on what
amounts to a single product / index, my results have been
outstanding and predictable. Unfortunately, I know that
someday I'll likely have to transition over to more volatill e
products again. But with the VIX where it's been at recently, I can
stick with a single index for my option set ups and do just fine.
I'll cross the lower volatility bridge when we come to
it.
I refer to you guys as the options expert, of which I am not.
Appreciate when you post various complex strategies involving
spreads and ladders vs just buying or selling a Call or Put option
-especially when it relates to the SPY and ES system trades
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I do the same thing
I understand the reasons why so many are bearish right ...
Posted by mirhamedali on 12th of Sep 2022 at 03:10 pm
I do the same thing DigiNomad: use TA to lean in one direction while opening spreads.
I like to open credit spreads just because my downside risk is capped, plus I think the margin requirement is lower since I am taking on the credit. I agree, its good to have a system where you can win in 3 of 4 scenarios, 80% of the time.
I open 2-3 month long spreads and usually close them out in about a month ... depending on where we are in the elliott wave counts. I find its not worth holding all the way
You can make more with spreads than with the indexes themselves
Have you guys looked at
Posted by mirhamedali on 12th of Sep 2022 at 03:14 pm
Have you guys looked at Ladder credit spreads? You are basically adding on one far OTM option to cover the possibility of a surprise move in the wrong direction.
By doing a ladder you can win no matter which direction the market moves ... all you need to bank on is the market moving at least 3 % up or down - a flat market is no good.
Can you give and example
Posted by tmbrook1 on 12th of Sep 2022 at 06:32 pm
Can you give and example of how you would set one of these up. How far out is the additional option.
@tmbrook1, here is the example
Posted by mirhamedali on 12th of Sep 2022 at 11:52 pm
@tmbrook1, here is the example you requested
This is on QQQ. First image is a normal Bear Put Spread, 2nd one adds a 385 Call which is just $0.21, so its dirt cheap insurance in case the market moves against me. Even if the market goes up 10% my loss is almost zero.
But as you can see the insurance starts losing some juice after about a month, but its best practice to exit spreads early (at around 50% of max profit).
As an advanced tactic, if the market moves against you then you can sell that OTM call if you feel the market will come back in your favor thus banking some profit in the interim.
Plus seems like the big
Posted by bpozdoll1717 on 13th of Sep 2022 at 08:11 am
Plus seems like the big boys have advance knowledge of a good CPI. No way they run it up to a key announcement without some info leaked. Expect a lower CPI.
The SPX formed a clear
Posted by steve on 13th of Sep 2022 at 08:18 am
The SPX formed a clear triangle yesterday (posted here) which suggested a push higher
Ladder happens naturally if you're
Posted by DigiNomad on 12th of Sep 2022 at 03:52 pm
Ladder happens naturally if you're watching the market daily and doing credit spreads on both sides of the market (selling calls spreads wehn overbought and put spreads when oversold).
I tend to sell options with around 45 days to epiration and they are always out of the money (no more than 20 delta when sold). Given these parameters, I'm not sure what you mean by "flat market is no good." I would LOVE a flat market right now. Although, you want the vol to be high when you enter the trade, you WANT it to collapse after you're in (with credit spreads)
I dont want the market
Posted by mirhamedali on 12th of Sep 2022 at 04:50 pm
I dont want the market to be flat so that I can exit the trade early. I rarely hold to expiration. I normally exit halfway through. I end up making more on a per day basis that way.
You are right the ladder can happen naturally if you are opening trades on both sides, that's a cool approach. But then one trade may be a loser. However with an actual ladder each of the trades can be winners.
I only trade SPX options
Posted by DigiNomad on 12th of Sep 2022 at 09:43 pm
I only trade SPX options in taxable account and SPY options in retirement accounts (better liquidity but I have to use more contracts). Since I've focused my efforts on what amounts to a single product / index, my results have been outstanding and predictable. Unfortunately, I know that someday I'll likely have to transition over to more volatill e products again. But with the VIX where it's been at recently, I can stick with a single index for my option set ups and do just fine. I'll cross the lower volatility bridge when we come to it.
I refer to you guys
Posted by matt on 12th of Sep 2022 at 03:26 pm
I refer to you guys as the options expert, of which I am not. Appreciate when you post various complex strategies involving spreads and ladders vs just buying or selling a Call or Put option -especially when it relates to the SPY and ES system trades