With a nice, robust gain yesterday I could not but help to take a look at the SPX option chain to see what was available in the way of call spreads. Premiums were thin and in order to get a decent credit, I would have to move closer to the market than I was comfortable.
Remember. The primary profit engine behind our credit spread strategy is time decay. Our goal is to sell spreads where we think the market is not likely to go. If all goes well, those spreads will erode in value and will be closed out, or expire, allowing us to keep our credit.
If you sell you spreads too close to the action, you're likely to spend some tense moments in front of your computer watching the index. It can be exciting, but this strategy favors the dull passage of time.
So, a call spread was not sold. With the market giving up some of yesterday's gains it is time to return to the porch swing and watch the grass grow, or the paint dry, or whatever... Just so long as our put spread stays safely away from the money.
Discover the stock options strategies favored by professional traders in our FREE options trading mini-course!
Subscribe to:
Post Comments (Atom)
Blog Archive
-
▼
2007
(119)
-
▼
January
(15)
- SPX Credit Spread and the Option Greeks
- Credit Spread Trade Update with the SPX at 1,427
- Swing Trading With Options
- Credit Spread Trading and the Market Sell-Off
- Call Spreads - Option Premium Analysis
- Iron Condor Trading on the SPX
- Stock Option Greeks and a Favorable Price Move
- SPX Credit Spread Filled
- Credit Spread and SPX Market Update
- SPX Bull Put Credit Spread Update
- SPX Credit Spread Update
- Hunting an Iron Condor Options Trade for February
- Our First Credit Spread Option Trade for 2007
- Credit Spread Trading on the SPX
- Iron Condor and Credit Spread Trading on the SPX
-
▼
January
(15)
No comments:
Post a Comment