Credit spread tweaks

EOG STO the 21 DTE 97/98 ccs for 0.23. Cb now 14.41 against a 120/120 and 125/126 put #fuzzy
EXPE STO the 21 DTE 117/118 ccs for 0.20 credit. Cb now 9.43 against a 110/110 put #fuzzy.

It rained over the weekend and my family was busy so I watched a bunch of tasty trade re-runs. 2 things I forgot about. They did a section on defined risk and looked at the number of times tested credit spread returned back to the level you placed the spread. It was less than 2:10 times, actually I think as they looked across multiple occurrences and it was much lower around 2%. So gave me an idea for credit spreads and #spycraft which I will start up again next week after some CC are called away.

I will be very mechanical in adjusting credit spreads now. As soon as the short strike is breached, I will delta hedge it to neutral and create a back spread. Odds improve that if it is breached will not return to that level so at that point you have a directional trade and might as well take advantage if it.

What this means is that if the short strike is breached, I will buy back half the # of shorts calls/puts as the original credit spread thereby creating a 2:1 back ratio. Then if we keep moving in that direction you get the boost from the directional kick.

Probably best to set these up 21-45 DTE so you have some room. A weekly probably would not work as well once ratioed because of the gamma effects close to expiration.