Next SPY 10am Weekly

by Jeff on September 7, 2010

I’m not going to let one bad week take me out of a winning strategy. As I write this, /ES (SPX futures) is down 5 or so and SPY could open around 109.8. Early evaluation shows (and this can change quite a bit after the open even if price is flat) a 113/115 Bear Call to be within the parameters of the methodology (0.20 credit). No, there is no PPS reversal, but there is solid resistance at 113.2 and only 4 days (or less – just the length of the white line) to hold. I’ll make the decision at 10am. See the chart below. You can bet this is going into my trade journal!

◄ Jeff ►

Tagged as: bear call spread, SPY 10am Weekly

  • rick

    I’m interested after watching the youtube video, It dont remember hearing anything about a stop?nnThanks

    • http://theoptionguru.com/blog Jeff W

      Rick,nnYou’re right, you didn’t. Because I am able to monitor my trades (most of the time) off and on all day, and SPY (usually) doesn’t move that much, I don’t use a stop (on anything). I’m not even sure what rule I would use if I was to set a stop because a lot depends on the velocity (how much of a move in what time frame) of the move and I don’t know of any trading platform that can do that – yet.nnI would venture to say if you wanted to set a stop you would do it on the favorable side of the short strike and not actually at the strike, and a lot depends on how far away the price is from the short strike when you entered. Just a what if: if you entered a Bull Put (as of this writing at 6:30 AM EST)) on SPY with a short option at 127 and your long at 125, I would set a stop based on the price of the underlying (SPY) less than or equal to 127.20.nnWhy did I pick 127.20? If you plot this on a risk graph on the TOS platform, 127.20 would be the point where your max profit would start to decrease based on expiration. Yes, it’s an arbitrary point, but it’s a rule that you can easily follow and see how it works out. That’s what it’s all about – making rules and following them; and when they don’t work – adjust.nnOh, and by the way, if you are interested in weekly options using credit spreads, you might want to check out the Yahoo group Weekly Credit Spreads.nnu25c4Jeffu25ba

Previous post:

Next post: