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Trading credit spreads during volatile times


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#1 cycletimer

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Posted 04 March 2018 - 04:14 PM

It's been decades ago (in the mid-late nineties) but I subscribed to Mark Young's original letter, back when he recommended the occasional credit spread using index options.  I'm curious Mark, when was the last time you traded credit spreads? (Mark, I loved your infamous "TUMA" indicator- as in "thumb up my arse!"):

 

Anyway, I just posted on my blog about credit spreads, it's not for novices but it can be very lucrative in volatile times like now, with limited risk: 

 

https://firechecklis...tional-trading/


My early retirement journey (blog): https://firechecklist.net/

Twitter: @MrFireby2023

#2 12SPX

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Posted 05 March 2018 - 08:09 AM

It's been decades ago (in the mid-late nineties) but I subscribed to Mark Young's original letter, back when he recommended the occasional credit spread using index options.  I'm curious Mark, when was the last time you traded credit spreads? (Mark, I loved your infamous "TUMA" indicator- as in "thumb up my arse!"):

 

Anyway, I just posted on my blog about credit spreads, it's not for novices but it can be very lucrative in volatile times like now, with limited risk: 

 

https://firechecklis...tional-trading/

I have also been trading credit spreads since the 1900's lol and yes they can be very profitable when there is a little bit of volatile, it is when you get into a directional move it can be costly like last years straight up move.  A good example is when the vix is low you need to be conservative on the upside and trade pretty far out on the put side in case you get a quick downside move like we saw last month.  Currently were in an incredible space for them as we see nice up and down movements making premiums very rich on both sides and you can trade pretty far out with little risk.



#3 q4wer

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Posted 05 March 2018 - 09:12 AM

why you selling put options, how far out in time to write put options?  weekly ?  or same day ?  SPX has Monday, Wednesday, Friday weekly options. The same day option is risky if the market drops very fast.



#4 cycletimer

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Posted 05 March 2018 - 09:37 AM

why you selling put options, how far out in time to write put options?  weekly ?  or same day ?  SPX has Monday, Wednesday, Friday weekly options. The same day option is risky if the market drops very fast.

I usually sell one-to-months out and my timing is to capture an upcoming dividend in the event the stock is put to me.  For example, I'm short the slightly out of the money puts on T and VZ.  If we get a dip in the stocks prior to April, both stocks will be put to me as the puts will be exercised.  I'll capture the dividends, after which I'll sell at the money covered calls on the stocks, capture that premium on the calls prior to these being calls away.  I call it a "triple dividend."  Premium is captured 3 ways, the premium on the sold put, the dividend I captured, immediately followed by the call premium.  THe total return from this strategy is pretty high, depending on the volatility/beta of the stock.


My early retirement journey (blog): https://firechecklist.net/

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#5 cycletimer

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Posted 05 March 2018 - 09:38 AM

why you selling put options, how far out in time to write put options?  weekly ?  or same day ?  SPX has Monday, Wednesday, Friday weekly options. The same day option is risky if the market drops very fast.

Man, I bet you've been having fun with them lately!

 

 

It's been decades ago (in the mid-late nineties) but I subscribed to Mark Young's original letter, back when he recommended the occasional credit spread using index options.  I'm curious Mark, when was the last time you traded credit spreads? (Mark, I loved your infamous "TUMA" indicator- as in "thumb up my arse!"):

 

Anyway, I just posted on my blog about credit spreads, it's not for novices but it can be very lucrative in volatile times like now, with limited risk: 

 

https://firechecklis...tional-trading/

I have also been trading credit spreads since the 1900's lol and yes they can be very profitable when there is a little bit of volatile, it is when you get into a directional move it can be costly like last years straight up move.  A good example is when the vix is low you need to be conservative on the upside and trade pretty far out on the put side in case you get a quick downside move like we saw last month.  Currently were in an incredible space for them as we see nice up and down movements making premiums very rich on both sides and you can trade pretty far out with little risk.

 

I bet you've been having fun lately!!!


My early retirement journey (blog): https://firechecklist.net/

Twitter: @MrFireby2023

#6 q4wer

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Posted 05 March 2018 - 10:27 AM

playing on the same day weekly option once earned me 200k in a month, and lost them all in a single trade.



#7 12SPX

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Posted 05 March 2018 - 10:35 AM

 

why you selling put options, how far out in time to write put options?  weekly ?  or same day ?  SPX has Monday, Wednesday, Friday weekly options. The same day option is risky if the market drops very fast.

Man, I bet you've been having fun with them lately!

 

 

It's been decades ago (in the mid-late nineties) but I subscribed to Mark Young's original letter, back when he recommended the occasional credit spread using index options.  I'm curious Mark, when was the last time you traded credit spreads? (Mark, I loved your infamous "TUMA" indicator- as in "thumb up my arse!"):

 

Anyway, I just posted on my blog about credit spreads, it's not for novices but it can be very lucrative in volatile times like now, with limited risk: 

 

https://firechecklis...tional-trading/

I have also been trading credit spreads since the 1900's lol and yes they can be very profitable when there is a little bit of volatile, it is when you get into a directional move it can be costly like last years straight up move.  A good example is when the vix is low you need to be conservative on the upside and trade pretty far out on the put side in case you get a quick downside move like we saw last month.  Currently were in an incredible space for them as we see nice up and down movements making premiums very rich on both sides and you can trade pretty far out with little risk.

 

I bet you've been having fun lately!!!

 

They've been great as my conservative trades are generally on monthly trades but with this volatility even using them for daily, sometimes minutes trades has been great!  I've always liked them because you just let the time work for you and don't have to get the exact time correct all the time especially in a volatile period such as now.  However I am following your trades and they seem to have been great, impressive!!  This is why its called "traders talk" not buy and hold to the moon lol!!  Great job!!!



#8 cycletimer

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Posted 05 March 2018 - 06:40 PM

playing on the same day weekly option once earned me 200k in a month, and lost them all in a single trade.

OMG!  OUCH!


My early retirement journey (blog): https://firechecklist.net/

Twitter: @MrFireby2023

#9 cycletimer

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Posted 05 March 2018 - 06:42 PM

 

 

why you selling put options, how far out in time to write put options?  weekly ?  or same day ?  SPX has Monday, Wednesday, Friday weekly options. The same day option is risky if the market drops very fast.

Man, I bet you've been having fun with them lately!

 

 

It's been decades ago (in the mid-late nineties) but I subscribed to Mark Young's original letter, back when he recommended the occasional credit spread using index options.  I'm curious Mark, when was the last time you traded credit spreads? (Mark, I loved your infamous "TUMA" indicator- as in "thumb up my arse!"):

 

Anyway, I just posted on my blog about credit spreads, it's not for novices but it can be very lucrative in volatile times like now, with limited risk: 

 

https://firechecklis...tional-trading/

I have also been trading credit spreads since the 1900's lol and yes they can be very profitable when there is a little bit of volatile, it is when you get into a directional move it can be costly like last years straight up move.  A good example is when the vix is low you need to be conservative on the upside and trade pretty far out on the put side in case you get a quick downside move like we saw last month.  Currently were in an incredible space for them as we see nice up and down movements making premiums very rich on both sides and you can trade pretty far out with little risk.

 

I bet you've been having fun lately!!!

 

They've been great as my conservative trades are generally on monthly trades but with this volatility even using them for daily, sometimes minutes trades has been great!  I've always liked them because you just let the time work for you and don't have to get the exact time correct all the time especially in a volatile period such as now.  However I am following your trades and they seem to have been great, impressive!!  This is why its called "traders talk" not buy and hold to the moon lol!!  Great job!!!

 

Thanks,  It is all about timing when trading options but credit spreads do allow a little wiggle room and allow the trader a longer leash to be early in a trade!  


My early retirement journey (blog): https://firechecklist.net/

Twitter: @MrFireby2023

#10 12SPX

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Posted 06 March 2018 - 10:19 AM

 

 

 

why you selling put options, how far out in time to write put options?  weekly ?  or same day ?  SPX has Monday, Wednesday, Friday weekly options. The same day option is risky if the market drops very fast.

Man, I bet you've been having fun with them lately!

 

 

It's been decades ago (in the mid-late nineties) but I subscribed to Mark Young's original letter, back when he recommended the occasional credit spread using index options.  I'm curious Mark, when was the last time you traded credit spreads? (Mark, I loved your infamous "TUMA" indicator- as in "thumb up my arse!"):

 

Anyway, I just posted on my blog about credit spreads, it's not for novices but it can be very lucrative in volatile times like now, with limited risk: 

 

https://firechecklis...tional-trading/

I have also been trading credit spreads since the 1900's lol and yes they can be very profitable when there is a little bit of volatile, it is when you get into a directional move it can be costly like last years straight up move.  A good example is when the vix is low you need to be conservative on the upside and trade pretty far out on the put side in case you get a quick downside move like we saw last month.  Currently were in an incredible space for them as we see nice up and down movements making premiums very rich on both sides and you can trade pretty far out with little risk.

 

I bet you've been having fun lately!!!

 

They've been great as my conservative trades are generally on monthly trades but with this volatility even using them for daily, sometimes minutes trades has been great!  I've always liked them because you just let the time work for you and don't have to get the exact time correct all the time especially in a volatile period such as now.  However I am following your trades and they seem to have been great, impressive!!  This is why its called "traders talk" not buy and hold to the moon lol!!  Great job!!!

 

Thanks,  It is all about timing when trading options but credit spreads do allow a little wiggle room and allow the trader a longer leash to be early in a trade!  

 

Ya it was funny I started trading them in 1988 buying all the time losing my shirt!  Finally figured out to start selling them and have been doing it since!!