vintrader Posted Friday at 11:16 PM Posted Friday at 11:16 PM Sold a SPX call credit spread (6685/6700) for a net credit of $0.40 ($0.67 - $0.27) with same-day expiration (Oct 17). SPX was around 6645 I opened a "Buy to close" for SPX6685 with a stop price of $2:00. At around 2:10 PM, When the SPX touched 6658, the SPX6685 Call was around $1.8. I was not ready to loose money so I canceled my order. I was glued to the screen just hoping that SPX won't rise any further. It went to 6672 at around 3:10 PM and the SPX6685 Call was around $6.00 at that point. I was down almost $550 at that point. SPX came back to 6664 and my SPX6685 call was around 1.3. I was happy that I dodged a bullet but knew I was very stupid. Later around 3:20 PM, SPX went to 6678.88 and the SPX6685 call was back to $4. Still I didn't do anything. Was just hoping the day will end somehow. For next 40 mins, SPX hovered around 6670. Somehow, I ended the day without a loss with SPX at 6664. What should have been my strategy? When should I have closed my position and how much risk should I take? Any better strategy for same-day expiration SPX spread? Quote
Kim Posted Friday at 11:38 PM Posted Friday at 11:38 PM A better strategy would be not to trade options that expire the same day. Extremely risky. 3 1 Quote
TrustyJules Posted Saturday at 11:33 AM Posted Saturday at 11:33 AM 12 hours ago, vintrader said: Sold a SPX call credit spread (6685/6700) for a net credit of $0.40 ($0.67 - $0.27) with same-day expiration (Oct 17). SPX was around 6645 I opened a "Buy to close" for SPX6685 with a stop price of $2:00. At around 2:10 PM, When the SPX touched 6658, the SPX6685 Call was around $1.8. I was not ready to loose money so I canceled my order. I was glued to the screen just hoping that SPX won't rise any further. It went to 6672 at around 3:10 PM and the SPX6685 Call was around $6.00 at that point. I was down almost $550 at that point. SPX came back to 6664 and my SPX6685 call was around 1.3. I was happy that I dodged a bullet but knew I was very stupid. Later around 3:20 PM, SPX went to 6678.88 and the SPX6685 call was back to $4. Still I didn't do anything. Was just hoping the day will end somehow. For next 40 mins, SPX hovered around 6670. Somehow, I ended the day without a loss with SPX at 6664. What should have been my strategy? When should I have closed my position and how much risk should I take? Any better strategy for same-day expiration SPX spread? The better strategy is to understand gamma. Option trading in most circumstances is not rocket science and just playing percentages but the one thing that absolutely rips any strategy is gamma. When you have 0 dte trades gamma is sky high - I have a higher tolerance for it than Kim but I respect his point of view. If gamma moves against you and there is barely any time to expiry there is nothing you can do to control the outcome except pray. Quote
Optrader Posted 5 hours ago Posted 5 hours ago $15 spread for 40 cents ? This is trying to make pennies ? In front of stream roller ? And you see roller coming at you. Your question is what strategy can save you ? Quote
Optrader Posted 3 hours ago Posted 3 hours ago Market was in rally mode that day. You should have bought a reverse ATM call calendar Can you backtest and see how it could have performed ? Quote
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