MamaCash 7:56 am on Tuesday, January 29, 2019
Tags: SPX1dte ( 1,714 )

SPX 1dte

#spx1dte Sold SPX Jan30 1dte IC 2690/2695/2590/2585 @ .55 x6 across two accounts. Keeping trade size smaller for a while to recover from over-defending these trades.

elitethink 10:44 am on Tuesday, January 29, 2019

if i’m understanding correctly, if you closed the trade when the strike was hit the debit would be 2.50ish, and your loss would be 2.00ish and no opportunity for a gain. But, with the fly completion your losses are closer to 1.00ish with the opportunity for a gain.

am i mistaken?

thanks.

Jay
- MamaCash 10:50 am on Tuesday, January 29, 2019
  
  I usually defend before the short strike is touched. I would close for 2 or 3 x the credit for for a 2.50 loss. The fly definitely decreases max risk if the short strike is breached at the close as explained in several of my trades. That’s the reason I choose them over just letting the trade run into the close. Closing early is a different tactic and you wouldn’t wait for a full breach. Hope this helps.
  - elitethink 11:14 am on Tuesday, January 29, 2019
    
    agreed.
    
    here is my trade:
    STO ES 1/30 2585 x 2575 Put Vertical Spread
    STO ES 1/30 2680 x 2690 Call Vertical Spread
    2.00 credit
    
    I have been buying the spread back if it hits 3.00 using a stop limit on IB. Attempting to risk 1 point to make 2 points.
    
    Scenario in a market decline:
    If instead of buying the put spread back to close, I bought the 2595 x 2585 put spread at 3.00 using a stop limit to create the butterfly, I would have the same 1.00 at risk but would be able to make a profit if es closes between break evens.
    
    does this look correct?
    - MamaCash 11:26 am on Tuesday, January 29, 2019
      
      Looks good to me. You have a credit of $2. You turn the credit into a debit of $1 when you convert the put side to a fly. You’ve locked in a $1 loss unless you sell the fly for more than $1 or the trade closes ITM at expiration. Good job!
    - MamaCash 11:33 am on Tuesday, January 29, 2019
      
      Another benefit to using ES is that you can close the trades if there’s a big move in the middle of the night. My only problem with ES is that ToS commissions are unacceptable. Each ES option contract gets the same commissions as a futures contract. Do you trade at ToS?