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The longs settled and have only traded at 1.95. The short settled at 7.50. So the net is 3.60 for when you entered the trade and 3.60 for yesterday's settlements.
I wanted to bring this question up for the broader forum to see if anyone can shed some light on some ways to get a better fill when you open or close a position. Are there any tricks, strategies, or times when you open positions or close positions? I'd love to hear people's thoughts on this. Thanks a lot, have a great weekend.
I prefer to sell options during US day trading hours, the former pit hours. Usually the volume is highest after the former pit opening and before its close. ES options and other options with a high volume can be traded during the complete former pit hours. For some options you will receive acceptable fills also during night hours, for some of them (eg. energies) fills during night hours are terrible.
I do not sell very thinly traded options (eg. lumber).
I prefer selling options on Fridays, but of course there are other criteria for the best day.
I always place the order in the middle between bid and ask. Often there will be a fill, if not I will move the order tick by tick. Fills in the ES are easier to get than in coffee options.
It is preferable to enter a spread as a spread order. There are traders claiming there excellent experience legging into spreads (and making some additional money). I am not among them.
Yes, I remember an interview a few years ago from a MM on the floor and he said they price in the weekend decay early-mid friday because of the people who were coming in late friday hoping to snag the weekend decay and get out Monday.
Lately I have been doing spreads on both ES and SPX just depending on which broker I am using. Last week I put a spread on ES for $3.45 and I immediately get an Ask for $3.30 which is decent and then it filled 60 min later. I put the same spread on SPX and the Ask is $1.20 it sat all day and didn't budge from $1.20 till 3:45 pm then got filled.
(I did 2x on ES to make it equal)
I believe this has to do with SPX still being monopolized on one exchange and ES being on multiple exchanges.
As I mentioned in an earlier post I am still working on finding optimal hedging for selling puts. Part of the problem is figuring out how much of a market decline are you looking to protect against and what % of your portfolio are you looking to protect. Unfortunately a hedge really bites into profits if you miscalculate it. In a semi-slow grind down like we had in Jan a hedge as @ron99 suggested does offer some protection but it works much better in a sudden Aug 24 type drop. Also the longer and slower the grind downward takes the less effective it becomes
This link has an interesting graphic I just found. Basically there have been 11 Bear markets since 1956. This document a bull (bear) market is defined as a positive (negative) move greater than 15% that lasts at least 3 months.
Of course the problem is you never know when it will happen and you don't know a bear market till you are firmly in it and our issue is put spreads take 25-45 days to work.
Finally here is a good link on biggest up and down days in SP500
I'm experimenting with position sizing as well. It makes a big impact on draw down especially when the market grinds down. I usually keep between 6x and 9x as a reserve now. The upside is smaller but I sleep so much better at night.
Yes, I am using more margin as well. The thing you must decide is how far will you let a position go against you and what % of damage will that do to your account if it happens.
We have had 4 swings of 10+% up/down in the past 7 months and I don't think option prices have gone up that much to compensate us for taking the risk of writing. Maybe I am wrong?
I am also looking at strategies trading VIX as well since it has top and bottom limits and always is mean reverting. @ron99 if you would like me to start a new thread on vix just let me know so I don't pollute your thread
knowing statistics from the past for bigger drawdowns on a daily and a longer base can be helpful. Doing option selling plus other kind of trades can help a lot to diversify and reduce risk. But also one has to find a good balance between subsequent regularly selling options and using the market conditions to sell even more options for a better premium. At least that's the way I do it.
Regularly short and longer term options and keeping lots of reserve for times VIX is going up. If it does and I think the momentum is slowing down I sell another portion and one more after 1-2 days if possible ... The higher premium and greater likelyhood of premium to drop after a few days pays out. Combined with regularly selling I feel quite comfortable with this.
