The SPX is trading higher today on positive earnings news. That's good for us because yesterday saw our bull put credit spread filled and the market is now moving away from our short option's strike price.
Now, the directional move will not, on its own, allow us to take the trade off. The reason is because the spread consists of a long and short position, both of which will be effected by the respective option's delta. We may see some profitability because the short option has a higher gamma than the long, protective put. Our real profits will come from theta decay and that just takes some time...
With continued upside in the market we will start looking for a call spread that can be sold for a decent credit. If we're successful in doing so, we will then be trading an iron condor. I'll follow up with more discussion about that in subsequent posts.
Good trading!
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2 comments:
Hi, I was hoping that in the future maybe you could show an example of the greeks using the current spx trade. This will help drive the point home for me at least. Thank you Melinda
Hi, Can you show an example of the greeks using the current spx trade as an example. That will help drive home the point with me at least. Thank you
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