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Credit spread techniques
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Credit spread techniques

  #11 (permalink)
Northern California
Trading Experience: Intermediate
Platform: IB
Favorite Futures: Futures
arrowTrader's Avatar
Posts: 12 since Feb 2014
Thanks: 2 given, 2 received

RHcZL0Mfs View Post
... I let everything expire worthless meaning I didn't buy any of the legs back. If you are using thinkOrSwim, if you buy back a leg at .05 you will not get charge a ticket fee. Well, actually you will get charge a ticket fee but then you will automatically receive a credit

You have to give TOS credit for not charging commissions to close these options. It promotes good Risk Management by encouraging traders to unwind these short options that have a very poor risk/reward ratio.

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  #12 (permalink)
NW Florida
Trading Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
opts's Avatar
Posts: 234 since Aug 2012
Thanks: 29 given, 111 received

RHcZL0Mfs View Post
I am a day trader of options. I mainly trade weekly options.

What I enjoy doing is using the overnight high and lows and the previous day high, low and close levels. Using these five levels and the relationships between them will provide a lot of insight on what should happen.

For example, lets look at $PCLN from this past Friday.

On the chart,

- the pink is the overnight high and low
- the green is the prior day high
- the red is the prior day low
- the white is the prior day high. however, the green is covering the white line since these levels are the same.

I actually day traded this Friday and observe that the overnight high provided resistance. Once $PCLN broke the overnight low I knew it was over. And, when it broke the prior day low it was really over. So, at 8:40 AM I started to scale into a position of doing this with the weekly calls that expire that day

- Selling the 1190 calls and buying the 1195 calls at 8:40 by selling 3 legs
- At 9:00 I sold 10 more legs
- At 10:40 I sold 5 more legs
- At 14:00 started a new position of selling the 1180 calls and buying the 1185 calls (3 legs)
- At 14:15 sold 5 more legs of 1180 calls and buying the 1185 calls

I let everything expire worthless meaning I didn't buy any of the legs back. If you are using thinkOrSwim, if you buy back a leg at .05 you will not get charge a ticket fee. Well, actually you will get charge a ticket fee but then you will automatically receive a credit

Here is the chart... crap, I only have 2 posts and need 5 posts so here is a link to the chart

Some things to take away...

- At times, the overnight high and low will mark the high and/or low of the day
- If we open below the prior day close and break the over night low, it is pretty much over ( more downside )


Since I day trade options I don't look at the greeks. I just look at the intraday action and the price action. I keep things simple. ;-)

RH: Are you still trading this method? If so, how has it been treating you?


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