Hi all, I get many many questions regarding selling puts or calls in a spread. I have written a 13 page article explaining how I do them. It is of course not the definitive way to trade spreads, just what I am doing with very good results. The extra chapter to the book is free to anyone that wants it. Just email me at
putman3232@yahoo.com
and request a copy. There are probably many of you that have traded spreads longer than I, but the 13 page chapter will get beginners going in what i hope is the right direction.
I will put this on the front page of the blog for all to see. You will have to excuse any mistakes in editing as I just wrote it off the top of my head... and let me tell you, that is uncomfortable..lol
The article does reference the book often so if you have not bought the book, pick it up and you will have the complete guide to our way of using options.
Jerry
15 comments:
Many thanks jerry! =)
Thanks a lot Jerry.
@Trials 101 - I saw your post on the PCLN 470 put. LOL your right that cost for the spread or naked is a bit high haha. I think it fixed this morning lol.
I will be checkout out Jerry's picks and the SPX for this week. Market opens in 6 min and I will see which way everything is going before I make a move.
Hi all, down mkt 'today'. For me, I will wait until Tuesday to see if this down mkt is the real thing or a one day reaction. If a down mkt seems the trend, I will do some call spreads. But way out of the money. In turbulent times, settle for less but safer strikes. Resist the temptation to start thinking thoughts like, "well there will be an up mkt tomorrow" etc. Let the mkt tell you what is happening. Don't guess. It is a fools game to think that you can out-think-guess the market... I am not a believer in things like,
we have reached the 50 moving average support level or 200 or we are over sold or overbought etc etc. Part of that equation is that major buyers and sellers such as mutual funds have programs that react to the levels and do give some support. But they also figure in other things such as M-1 supple etc and one can over-ride the other and then support falls and falls. When the mkt falls through one level of support, the believers always say "ok, the next level of support is" etc
Even a broken clock is correct twice a day..
Regarding using weeklies and or monthlies and not jumping ahead to the next months options, I find it refreshing this morning to not have any positions. I will try to let the mkt tell me which way it wants to go and then I will go opposite.
Jerry
Great points Jerry!!
It's kinda refreshing to have NO positions, knowing full well, there will be crumbs aplenty come Tuesday or Wednesday.
It's raining in Dallas today. I feel a nap coming on :-)
rick
Yes it is an odd feeling that i have to fight all the time. I keep looking at options chains and thinking I could this , or i could that etc.. Jerry, relax and maybe take a nap like Rick...lol
Yes it is a down market today. I will wait till after lunch to see if it evens out or is still on the downturn.
@Jerry / All, I have never done a call and it seems the calls are less premium. why is that?
HI Ful; I do not know of any technical reason for lower call premiums. Sometimes they are higher and have more open interest and more strikes offered? It is just an auction. The one problem with weeklies that we have to contend with is that you have to wait a couple of days to get some open interest.
I put in an order for the SPX for the 1245 / 1240 put spread. If it goes through today great, if not then I will wait till tomorrow to make a move
Well the market seems to have stabilized a little bit, So I changed my order and it went through for the SPX at 1245 / 1240, but I changed the premium to .10, which is a good return for the vertical. It is 2% but 1.2% after comm's go through.
Wish I could get rid of the comm's but I have to stick with this broker until I build up for capital.
How are everyone else's trades going?
I opened a 1355/1365 weekly call spread for the SPX when the VIX was above 19. ROI was about 2%.
I am waiting to see how tomorrow turns out. PCLN has only upto 480 listed, where the closing price on it is 501 today. 480 is listed 1.29 with a volume of 1743.
Not sure who decides to restrict the strike price at 480 where it looks like it could have many bidders upto 450.
No trades today went through today, except closing a couple Goldman puts which I rode the freefall on. I kept seeking some extra on the SPX spreads that I had set up, never got filled. Will try again tomorrow. Looks like we are going to have a small bounce tomorrow.
Chris
Sold weeklys for the first time:
FAS 5/27/11 $26 Put
Yesterday, opened SPX weekly put spread 1250/1265 for 0.55 premium. ROI is over 3%. Looks lot better today, time decay kicks in.
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