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Creditspread

BSL Bull Put spread - Aug expires with strikes 10.76/ 10.51 technical reasons - there seems to be a recover in price by rallying past previous low, and after completing corrective legs fundamental - Goldman Sachs have a BUY rating with target of $14.95 over 12 months ( +37%) good probability of this credit spread- with 5 weeks until expiry there is 'time-decay' on side - the implied volatility is high for the past 30 days in upper range 42-47% - European style option cannot be exercised before expiry date - plenty of time to manage on table risk eg. 27/02 payoff diagram shows only -$250 if price down to 10.81, with reward of $1000 this is a good Risk reward if exit in two weeks - Price merely has to stay above the upper sold strike of 10.76 to win - if price rallies a lot can exit the trade for a substantial profit early - if price drops a lot, at a few weeks before expiry can roll down and out to recover loss next month - if decide to own the stock, its better to wait until after dividend payment in September as no tax imputations allowable and best not to have an options trade on during this time.....
ASX:XMJ
by Aussie-scalper
Neutral to bullish - bull put spread ( net credit) Options trade - Bull Put Spread technical - seems like a two legged correction in a weak bullish trend of equal amounts has indicated a pause in price ; The at the money put at 16.50 is sold for credit for Aug 20th expirey; The out of money put at 15.50 is bought for debit net credit $1000 scenarios - 1. If > 16.50 at expires keep money 2. if between 15.50 & 16.50 try to get out around breakeven... 3. If really goes down hard < 15.50 strike or breakeven point, may have to roll down for small loss...
ASX:ORI
by Aussie-scalper
2
Trader's Guide to Credit SpreadsThe strategies and ideas presented in this guide have been designed to provide you with a comprehensive program of learning. The goal is to guide you through the learning experience so you may be an independent, educated, confident and successful trader. There are numerous variations of traditional options strategies and each has a desired outcome. Some are very risky strategies and others require a considerable amount of time to find, execute and manage positions. Spreads are a limited risk strategy. Spreads Spreads are simply an option trade that combines two options into one position. The two legs of one spread position could have different expiration dates and/or different strikes. Spreads can be established as bearish or bullish positions. How the spread is constructed will define whether it is bullish (rising bias) or bearish (declining bias). Different types of spreads can be used for the same directional bias of the stock. For example, if the stock has a declining bias, a call credit spread or a put debit spread could be opened to take advantage of the same anticipated move down. In this guide we will be talking about Credit Spreads , which are a limited risk strategy. Learning how to manage risk is as important as learning the details of a strategy. Credit Spreads A credit spread is created when an investor simultaneously sells-to-open (STO) one option and buys-to-open (BTO) another option. The premium received for the STO is always greater than the premium paid for the BTO thus creating a net credit to the account. Example : STO a call using the 120 strike for a credit of $5.20 BTO a call using the 130 strike for a debit of $3.80 Net credit for the spread is $1.40 = 5.20 credit - 3.80 debit The ideal construction of a credit spread is to sell-to-open (STO) an out-of-the-money (OTM) strike and buy-to-open (BTO) the strike that is 5 – 10 points further out-of-the-money (OTM) using the same expiration. When opening a call credit spread , further OTM means a higher strike. When opening a put credit spread , further OTM means a lower strike. Both legs are opened on the same underlying equity and use the same expiration month. Call credit spreads are opened when there is a declining bias and will be profitable if the stock moves down. This is because a call credit spread is opened for a credit and since the value of a call option decreases as the stock goes down, at some point the spread will be bought-to-close (BTC) for less than it was sold-to-open (STO). Here is an example: Stock trading at 500 and has a declining bias. STO 510 call BTO 520 call This spread creates a credit of $4.80 Stock declines to 490 causing the values of the calls to also decline. The position can now be closed for a profit. BTC 510 call STC 520 call The cost to buy back the spread is only $3.80. Since the stock declined in value, the call options are cheaper. The spread was STO for a credit of $4.80 and BTC for a debit of $3.80 resulting in a $1.00 profit. Put credit spreads are opened when there is a rising bias and will be profitable if the stock moves higher. This is because a put credit spread is opened for a credit and since the value of a put option decreases as the stock goes up, at some point the spread will be bought-to-close (BTC) for less than it was sold-to-open (STO). Here is an example: Stock trading at 520 and has a rising bias. STO 510 put BTO 500 put This spread creates a credit of $3.60 Stock rises to 530 causing the values of the puts to decline. The position can now be closed for a profit. BTC 510 put STC 500 put The cost to buy back the spread is only $1.80. Since the stock went up in value, the put options are cheaper. The spread was STO for a credit of $3.60 and BTC for a debit of $1.80 resulting in a $1.80 profit. Time decay is a positive factor in trading credit spreads. Since the position is opened for a credit, money comes into the traders account immediately. As time value decays, combined with a favorable movement of the stock, the value of the position will decrease allowing the trader to buy-to-close (BTC) the position for less than it was originally sold-to-open (STO). Risk and Reward on Credit Spreads Reward The maximum profit that can be earned from a credit spread is equal to the net credit received when the spread was opened. For a credit spread to realize the maximum profit, both legs of the spread would need to expire worthless which means the position would need to be held until expiration and be out-of-the-money at expiration. It is not advised to hold positions until expiration. Short term movements in the stock plus time value decay provide opportunities to close out positions for a profit of, generally, about 10%. If a position is profitable and the trader decides to hold the position hoping for a bigger profit or in an attempt to carry the position to expiration, there is a good chance that the profit can disappear, and the position could turn into a losing position. A good way to lose money is to wait for a bigger profit. Risk The maximum risk, or potential loss, from a credit spread is the difference between the two strikes minus the net credit. Example: STO 120 call for a credit of $5.20 BTO 130 call for a debit of $3.80 Net credit for the spread is $1.40 The difference between the strikes is 10 points. $10 is the max risk less $1.40 credit = risk of $8.60. The maximum profit is equal to the net credit, $1.40. Losses occur when the short strike (the STO leg) is in-the-money at expiration. This is because the trader has sold to someone else the right to buy the stock at the short leg strike. Since the trader does not actually own the stock, they will need to buy it and sell it at a loss. A maximum loss will occur when both strikes are in-the-money at expiration. The breakeven point on a bearish (call) credit spread is the lower strike price plus the net credit. Referring to the example above, if the stock settled at 121.40 at expiration, there would be no loss and no profit. Example of breakeven point on above credit spread: Stock trading at 121.40 Buyer exercises the right to buy stock from you at 120. Since you do not own the stock, you buy it at the market price of 121.40 and sell it at 120. This results in a $1.40 loss You get to keep the original credit of $1.40. This netted against the $1.40 loss results in breaking even on the position. The breakeven point on a bullish (put) credit spread is the higher strike price minus the net credit. Calculating the Return There are two ways to view the percentage return of profits from a credit spread. One is to divide the profit by the difference between the strikes. If the difference between strikes is 10 points and the trade resulted in a $1.00 profit, that would be a 10% return ($1.00 / 10). The second approach is to calculate the return based on the amount of capital that was at risk. After all, if the trade lost 100% of the risk, that is the amount the trader would no longer have. So, the profit percent is calculated by dividing the profit by the risk. In the example above, the net risk is $8.60. If the credit spread trade resulted in a $1.00 of profit, the percentage return would be 11.63% ($1.00 / $8.60). This approach shows the importance of managing risk. Lower risk drives higher returns relative to capital at risk. Opening a new Call Credit Spread The following steps should be referred to when opening a new call credit spread position: 1. Review the technical indicators on your chart and confirm there is a consensus between multiple indicators pointing to a declining bias. 2. Select an expiration that is two to four weeks out. Two weeks is generally the minimum time to expiration you want to use. Building time into options positions is advised in case it needs to be managed. The sweet spot for opening new positions is three weeks to expiration. 3. STO an out-of-the-money (OTM) call strike. 4. BTO the strike that is 5-10 points further out-of-the-money (OTM). With a call spread, further OTM means a higher strike. Generally, when properly constructed, the credit on a 5 point spread will be in the range of $1.20 - $1.80. A 10 point spread will generally be 2.50 – 3.50. The closer the strikes are to the current price, the higher the credit, while this reduces the overall risk of the position, it also increases the chances of the position moving in-the-money (ITM) which can result in an overall loss. 5. When placing the order, always use a Limit Order . A limit credit order specifies to the market the amount of the credit you will accept. A limit credit order will be filled at the specified limit or higher. Market orders should not be used. 6. With some stocks and indexes, the difference between the bid and ask is quite large. The broker will usually give you a quote called the “Mark”. This is the midpoint between the bid and ask. It is the price you should start with when submitting your limit credit order. 7. Calculate the risk of the position. Difference between the strikes – credit = risk. A position with a credit of $4.50 and 10 points between the short (sold) and long (buy) strikes would have a risk of $5.50. 8. Use the risk number to determine the number of contracts to open. Risk x 100 = the investment required for each contract. With $5.50 of risk and 1 contract, the total investment would be $550. ($5.50 x (1 contract x 100 shares per contract)). The total investment on 4 contracts would be $2,200. ($5.50 x(4 contracts x 100 shares per contract)). 9. Once you know the total investment required per contract, you can decide how many contracts to trade based on the size of your portfolio and personal risk tolerance. 10. After the trade has been opened, place a Good-til-Canceled (GTC) order to close the position. A GTC order will stay active until market conditions are such that the position can be closed for a profit. GTC orders execute automatically and do not require you to be in front of your trading platform to take advantage of the profit opportunity. Place the GTC for a limit debit price based on your desired profit target. One example is to set a GTC for 50% of the credit you received when you opened the position. With a credit of $4.50, a GTC would be placed to buy to close the position at $2.25 allowing a $2.25 profit.
SP:SPXEducation
by NewCycleTrading
3
Credit spreads - when things go wrong ! Here is an example of a 'paper trade' that went wrong - and trying to roll the strike down; to recover loss and lose only brokerage. initial entry - June 22 Bull put spread with Sold 12.19 July 15 / buy 11.76 - for net credit $700 at around underlying of 13.00 Roll down position of options to avoid being exercised at expiry ( as European sold leg) second entry - buy rolling down ( and not out to Aug) we have sold 10.68 Jul / buy 10.25 - for net of 0.00 ( after loss of -$900 on initial entry exit) This is merely a recovery of loss second leg....if this is the worst outcome without being 'execised' and being forced to take delivery of stock at 10.68 then it's a good outcome to lose 6 legs of brokerage at about $30 each =- $180
ASX:FLT
by Aussie-scalper
WES - neutral to bullish strategy : Bull Put Spread ( options) The Consumer discretionary sector is correcting in a Bull leg - it has done 'normal' correction so far in length and time; SO looking at a stronger leading stock in the sector - we have a similar action. As this places a slightly higher probability of the stock at least holding 'above' support zones below - a neutral to bullish options credit spread can take advantage of slightly higher options implied volatility for the past 30 day ( 33% vs 27%) ; and with only 14 days left on June 25th expiry can get the 'time-decay' before it closes below credit leg strike of 40.75. Bull Put spread June expiry : -15 shares @ 40.75 strike ( european) = -0.74 +15 @ 40.06 = +0.53 diff = + $ 464 premium paid no stops required as if stock expires 'in the money below 40.74, I will buy the stock after being exercised and hold for a recovery of any losses on the table whilst doing a covered call strategy for extra income & hold for dividend payment in 2 months time..... The entry strategy : Firstly, the consumer discretionary sector is down three bear bars without too much overlap, and it has equaled the largest correction recently of about -9.5%. As its a fairly strong uptrend, I anticiapte it won't drop to much further or if so, it will recover fairly quickly to AT LEAST present levels for the next two weeks.... ( neutral) This is because this sector is defensive in nature, and coming to end of June Quarter should see ' window dressing' by FUNDs on the conservative side. Stock analysis : WES has a similar corrective degree though only -7.5%, and is the 'Leader' in terms of strength in this sector. The entry signal is based loosely on 'The ANTY' which takes advantage of catching brief corrections in a larger trend. The modified Stochastic indicator shows its cycled down to corrective part of cycle creating a disparity in price to averages. I only haven't waited for 'confirmation of next day recovery because I wish to use an options - spread as ' protection rather than a stoploss, and I want to enter on a down- day to get the most oomph in the put premium I can sqeeze out given only 14 days left for time-decay to do the rest of the errosion in premium ( and thus my profit being a credit spread).
ASX:XDJ
by Aussie-scalper
neutral to bullish BXB ( asx) - bull credit spread This is based on ' The Anty' strategy in which after a normal correction degree, there is at least the same or better recovery in price - a neutral to bullish strategy is bull put spread ( paid a credit) and with only 8 days until expiry benefit from time-decay at a fairly high probability scenario....it needs to close below 10.98 at expiry ( using european style options) so get exercised and forced to purchase stock at this price ( 500 shares contracted). There is put protection below at 10.48 so if really falls hard the most I can lose is -$500 ( fixed loss). Of course I would hold the stock until at least recover the loss as an attractive price over 3 months...
ASX:BXB
by Aussie-scalper
IAG ( ASX ) : options Bull Put Spread strike 5.50 net credit Would I like to own IAG for a premium price? If I can pick it up for 5.50 that's historically a better than fair price in past months. However - that's only if the credit leg of options gets exercised in two weeks until expiry = plan B. Plan A _ book a net credit on Bull Put spread, with protection ( insurance) 1 strike below at 5.25 ( -0.25c) providing stock does not fall below 5.50 + put cost of 0.14 = 5.36 in next two weeks... Placed trade with 80 contracts = 8000 shares @ 5.50 strike for 0.14c = +$1120 credit Placed 80 contracts = @ 5.25 0.08 = - $ 640 debit net credit = + $480
ASX:IAG
by Aussie-scalper
American Express suggests continuation of downtrendThanks for viewing, I'll give my technical and fundamental view briefly; Technical; - After the sharp drop from February highs AMEX has under-performed the market - dipping ~51%, - This compares to an over 80% drop in 2009, - The dip was followed by the formation of a rising wedge, which normally indicates continuation of the trend preceding the pattern (which is down), - Elliot Wave seems to also suggest continuation - with wave (5) down possible, - The 55 EMA showing resistance, - I see potential support below at $60, $57, and the $50 - but if the stock equals its 2008-9 drop in % terms we are looking at sub-$25. Fundamental; - Credit Card (and charge card) Companies have a licence to print money, all payments made on credit expand the monetary supply (inflationary) - until debt is extinguished (deflationary). Over the past 10 years, they have been able to borrow at negative real rates and pocket the spread. But when the economy turns down, these Companies are hit hard by defaults, - Even in good times, retailers balk at being charged 6% per charge card transaction, - What are air miles gained on transactions worth these days when no-one is flying?, - From the last recession, I read one consumer credit exec talking about the increase in defaults in terms of MULTIPLES of the rise in unemployment www.forbes.com). They didn't say what multiple, but If the multiple is just 1, then the default rate (which would impact shadow banking, consumer credit, and unsecured lenders first and worst) could jump to 20-25% of all outstanding debt balances (pre-crisis unemployment below 4% and estimated to exceed 30% by Goldman Sachs). Even a 1.5 multiple would yield 35% default rates. Who knows how things will shake out, - It will all depend on the underwriting standards over the past few years, if newly signed-up customers are among the most credit-worthy, then things won't be so bad (data suggests that default rates even among CC customers with FICO scores above 740 have tripled recently www.forbes.com). If, when times were good cards were sent to anyone with a pulse then things won't be as great, - The Fed is buying distressed ABS and MBS securities, apparently without regard for the creditworthiness of the underlying security, it is feasible that all this credit card debt packaged up and sold as an asset backed security has/will be been sold to the Fed at 100 cents on the dollar as it started to show signs of rising defaults in the underlying assets. This is a positive factors for the Company - I have doubts if it is positive for the economy down the line, - CC Companies are offering repayment holidays - possibly in part to defer incurring defaults - this will of course impact on profitability. - It all depends how you see this crisis - as being better or worse than 2008-9. My view is that this is many times worse, but that is just me. There are many reasons to expect higher defaults as compared to 2008-9 in an economy that has stopped on a dime, - Today's dividend yield of 1.79% seems insufficient to compensate investors for the higher risk associated with holding equities - considering the stock is down over 30% from Feb highs. This is my view in general as well, a lot of stocks are "growth" stocks, which do not pay (in my view) a high enough risk-adjusted dividend to be worth owning. This is all gravy when the stock is rising, but when the dividend is below inflation AND the stock is losing value, there is less incentive for an investor to hold firm. If you combine this with a tendency of this stock to significantly underperform the market in recessions then you understand the basis for my bearish view. So, overall, this stock rides high when times are good and has a history of being impacted more than the average. I don't see why that wouldn't still apply. Cheers, and protect those funds
NYSE:AXPShort
by flyinkiwi10
2
Diary | 3/18/2020 | SPX SpreadAside from this, I am wishing everyone good health. Crazy times we live in. Justification: Directional Play: Just trying to flatten my delta in $SPX. I will look to manage these trades independently. Technical: Above 50% retracement, below 161.8% projection. Fundamental: If/Then: Take profit? 50% of credit received. Where will you hedge? $1900 and $2740. Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
SP:SPX
by Physik
Diary | 3/4/2020 | SPX SpreadJustification: Directional Play: Dynamic short delta play. Capitalizing on high IV. Will look to the put side if the opportunity presents itself. Technical: Above 61.8% retracement. Fundamental: Fed cut rates; consumer fundamentals in a good place; goods trade deficit contracted; manufacturing business outlook recently rose to it's highest levels, but virus and future trade issues may cause a hit; housing market hot as home building permits rise to highest levels; world supply chains at risk due to this virus thing; global yields have generated massive inflows in passive indices that are heavily weighted towards a few stocks; insane speculation in the derivatives market. If/Then: Take profit? 50% of credit received Where will you hedge? $3225 Strategy Details: Short and Long leg: $3225, $3445 Short Leg Delta: 0.13 Duration: March 20 Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
SP:SPX
by Physik
Diary | 3/3/2020 | /GC SpreadJustification: Directional Play: Short delta. Long-term I think gold could go higher, but it seems extended here and IV is high. Technical: Above 261.8% extension. Fundamental: Fed just made an emergency cut; spending sees loss in momentum, but consumer fundamentals in a good place; goods trade deficit contracted; manufacturing business outlook recently rose to it's highest levels, but virus and future trade issues may cause a hit; housing market hot as home building permits rise to highest levels; debt levels declining; world supply chains at risk due to this virus thing; global yields have generated massive inflows in passive indices that are heavily weighted towards a few stocks; insane speculation in the derivatives market. If/Then: Take profit? 50% of credit received Where will you hedge? $1800 Strategy Details: Short and Long leg: $1800, $1820 Short Leg Delta: 0.08 Duration: March 6 Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
COMEX:GC1!
by Physik
Diary | 3/2/2020 | RUT SpreadJustification: Directional Play: Yes, establishing long delta position to reduce short delta and margin. Technical: Below October low. If/Then: Take profit? 50% of credit received. Where will you hedge? $1410 Strategy Details: Short and Long leg: $1410, $1395 Short Leg Delta: 0.16 Expiration: March 6 Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
TVC:RUT
by Physik
Turning A Loser Into A Winner | 3/1/2020 | RUT SpreadWhat a sell-off! Here is a quick summary of how I was able to turn a sizeable loser into a winner. Trade 1: Opening Credit Put Spread $1.10CR To Establish Dynamically Long Position Short Leg: 2020-02-20 Sold 1 RUT 03/06/20 Put 1595.00 @ 3.75 Long Leg: 2020-02-20 Bought 1 RUT 03/06/20 Put 1575.00 @ 2.65 Trade 2: Opening Credit Call Spread $2.20CR To Reduce Directional Risk 2020-02-24 Bought 1 RUT 03/06/20 Call 1710.00 @ 1.34 2020-02-24 Sold 1 RUT 03/06/20 Call 1690.00 @ 3.54 Trade 3: Closing Trade 2 $1.25DB 2020-02-25 Sold 1 RUT 03/06/20 Call 1710.00 @ 0.60 2020-02-25 Bought 1 RUT 03/06/20 Call 1690.00 @ 1.85 Trade 4: Opening Credit Call Spread $2.45CR Lowering Call Side To Further Reduce Directional Risk 2020-02-25 Bought 1 RUT 03/06/20 Call 1695.00 @ 1.50 2020-02-25 Sold 1 RUT 03/06/20 Call 1675.00 @ 3.95 Trade 5: Closing Trade 4 $1.90DB 2020-02-25 Sold 1 RUT 03/06/20 Call 1695.00 @ 1.15 2020-02-25 Bought 1 RUT 03/06/20 Call 1675.00 @ 3.05 Trade 6: Opening Credit Call Spread $2.67CR Lowering Call Side To Further Reduce Directional Risk 2020-02-25 Bought 1 RUT 03/06/20 Call 1685.00 @ 1.90 2020-02-25 Sold 1 RUT 03/06/20 Call 1665.00 @ 4.57 Trade 7: Closing Trade 6 $1.97DB 2020-02-25 Sold 1 RUT 03/06/20 Call 1685.00 @ 1.12 2020-02-25 Bought 1 RUT 03/06/20 Call 1665.00 @ 3.09 Trade 8: Opening Credit Call Spread $2.65CR Lowering Call Side To Reduce Directional Risk 2020-02-25 Bought 1 RUT 03/06/20 Call 1665.00 @ 3.08 2020-02-25 Sold 1 RUT 03/06/20 Call 1650.00 @ 5.73 Trade 9: Closing Trade 8 $1.60DB 2020-02-26 Sold 1 RUT 03/06/20 Call 1665.00 @ 1.69 2020-02-26 Bought 1 RUT 03/06/20 Call 1650.00 @ 3.29 Trade 10: Rolling Trade 1 To The Call Side $0.01CR To Eliminate All Risk To The Downside 2020-02-26 Bought 1 RUT 03/06/20 Put 1595.00 @ 45.22 2020-02-26 Bought 1 RUT 03/06/20 Call 1595.00 @ 19.04 2020-02-26 Sold 1 RUT 03/06/20 Put 1575.00 @ 35.19 2020-02-26 Sold 1 RUT 03/06/20 Call 1575.00 @ 29.08 Trade 11: Opening Credit Call Spread $2.00CR To Capitalize On The Movement Downward (i.e., take in extra premium) 2020-02-27 Sold 1 RUT 03/06/20 Call 1580.00 @ 8.84 2020-02-27 Bought 1 RUT 03/06/20 Call 1590.00 @ 6.84 Trade 12: Opening Credit Call Spread $0.77CR To Capitalize On The Movement Downward (i.e., take in extra premium) 2020-02-28 Sold 1 RUT 02/28/20 Call 1500.00 @ 1.29 2020-02-28 Bought 1 RUT 02/28/20 Call 1510.00 @ 0.52 Trade 13: Closed Trade 12 $0.50DB 2020-02-28 Sold 1 RUT 02/28/20 Call 1510.00 @ 0.45 2020-02-28 Bought 1 RUT 02/28/20 Call 1500.00 @ 0.95 Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up. IWM RUT
TVC:RUT
by Physik
Diary | 2/20/2020 | RUT SpreadDescription: Initiating a long delta position in $RUT via a credit spread. Justification: - Directional Play: Yes, adding long delta and improving my theta/vega numbers with this short duration, high IV play. - Technical: Below 20 and 50 moving averages. We finally saw what markets crashing down looks like (again); in the /ES we took out a VPOC and currently sitting in last week's balancing zone. - Fundamental: Earnings continue to improve; Fed really supportive; jobs data positive; ISM manufacturing higher; market participants equally split between bullish and bearish. Virus data questionable. If/Then: - Take profit? 50% of credit received. - Where will you hedge? $1605 Strategy Details: - Short and Long leg: $1595, $1575 - Short Leg Delta: 0.10 - Duration: March 6 Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
TVC:RUT
by Physik
5
Diary | 2/14/2020 | /ES SpreadJustification: Sold into weakness prior to market close. - Directional Play: Yes. Adding long delta into a strong close prior to this extended weekend. - Technical: Below 20 and 50 MA. - Fundamental: Earnings continue to improve; Fed really supportive; jobs data positive; ISM manufacturing higher; market participants equally split between bullish and bearish ; virus data (if correct) shows the growth in virus cases slowing; trade going in a positive direction; world economy growth has persisted; and so on. If/Then: - Take profit? 50% of credit received - Where will you hedge? $3080 Strategy Details: - Short and Long leg: $3070, $3020 - Short Leg Delta: 0.09 - Duration: March 31 Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
CME_MINI:ES1!
by Physik
Diary | 2/14/2020 | SPX SpreadJustification: This comes alongside an /ES spread I sold a few minutes earlier in another account. Intention was to sell into pre-market close weakness. - Directional Play: Yes. Adding long delta into a strong close prior to this extended weekend. - Technical: Below 20 and 50 MA. - Fundamental: Earnings continue to improve; Fed really supportive; jobs data positive; ISM manufacturing higher; market participants equally split between bullish and bearish ; virus data (if correct) shows the growth in virus cases slowing; trade going in a positive direction; world economy growth has persisted; and so on. If market sells-off or volatility picks up, I'll look to manage (e.g., roll, reduce delta's, and so on). If/Then: - Take profit? 50% of credit received - Where will you hedge? $3110 Strategy Details: - Short and Long leg: $3100, $3050 - Short Leg Delta: 0.09 - Duration: March 31 Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
SP:SPX
by Physik
Diary | 2/13/2020 | /ES SpreadJustification: Sold into weakness prior to market open. - Directional Play: Yes. Portfolio was getting a bit too short; I needed some long delta. - Technical: Below 20 and 50 MA. - Fundamental: Earnings continue to improve; Fed really supportive; jobs data positive; ISM manufacturing higher; market participants equally split between bullish and bearish ; virus data (if correct) shows the growth in virus cases slowing; trade going in a positive direction; world economy growth has persisted; and so on. If/Then: - Take profit? 50% of credit received - Where will you hedge? $3060 Strategy Details: - Short and Long leg: $3050, $3000 - Short Leg Delta: 0.10 - Duration: March 20 Disclaimer: This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
CME_MINI:ES1!
by Physik
OPENING: /CL MAY 14TH 65/66 SHORT CALL VERTICAL... for a 1.60 credit; scratch at 16.00. Notes: Additive short delta adjustment trade in the May cycle, where I had an unpaired short put vertical ... . On a side note, I should have pulled off the profitable pair first (See Closing Iron Condor Post Below), then looked at delta before slapping on the additive long adjustment I made yesterday. (See Opening Short Put Vertical Post Below). In general, the order on these things should be to look for profitable, unit subtractive closes first; consider adjusting delta thereafter. I probably got distracted by a shiny object, but it's all good ... .
CShort
by NaughtyPines