Question about setting autotrade amount per trade and how it impacts existing trades for Option Trading

Question:  If I increase my autotrade option trading amount to $10,000 per trade, but already have qty 8 of the RUT Dec 670/680 Bull Put Spread that was placed in my account when my autotrade amount was set to $8,000/trade, should I expect the autotrade service to know to handle only 8 contracts, for example if we were forced to roll the RUT Dec 670/680 bull put spread into January?

Read the rest of this entry »

Question about strike price distance between short put & call for a SPY or RUT iron condor option strategy

Question:   It seems that the inside short legs of the RUT iron condor that we opened for December span 20% (e.g. 790 short call and 660 short put). The % distance between the short legs for the SPY iron condor span only 12% (131 short call vs 117 short put), so theoretically one side of the SPY iron condor (i.e. one of the credit spreads)  is more likely to go ITM (in the money);  is this the case, for these alternative investments?

Read the rest of this entry »

Question about how credit spread and iron condor options on the RUT, and on other indexes that trade European style, settle and expire

Question:  I see that you closed out 1/2 of our RUT Feb 840/850 bear call spread position on Thursday, the week of expiration, in our autotrade accounts.  Can you please explain why you closed out this spread even though the underlying RUT index was trading safely near 834?   The RUT index seemed to be safely below our short RUT Feb 840 call.  

Read the rest of this entry »

Question About Options Trading Strategy – Different Scenarios of a RUT Bear Call Credit Spread Option Expiring in-the-money (ITM) or out-of-the-money (OTM)

Question:  Hypothetically, for a credit spread options trading strategy,  if the RUT climbs and closes at 845 on Thursday, Feb 17th, the day that it ceases to trade, and then opens at 839 on expiration Friday, Feb 18th, did our RUT Feb 840/850 bear call credit spread option expire in-the-money (ITM)? 

Read the rest of this entry »

Why don’t we open the entire index iron condor option at the same time? It looks like you open the credit spread options individually. Why?

Question:  Why don’t we open the entire iron condor at the same time?   It looks like you tend to open credit spreads individually, focusing on one side of the iron condor at a time.   Why?

Read the rest of this entry »

Question about clicking down to a lower strike price if the underlying RUT, SPY or OEX index starts to drop, and if we should close our existing credit spreads first

Question:  I’ve been watching the trades for a few months and would like to try one of my own now. I understand that you recommend when starting out to start small, with at least $1000 and preferably start with the RUT.  Say I sell the RUT Feb 680/690 bull put spread.   Am I done for the month until you say to sell the Bear Call Spread to complete the iron condor, or do I close out the existing 680/690 bull put spread before opening the next trade?

Read the rest of this entry »

Question about how many RUT, SPX, SPY or OEX credit spread options to open in a particular month

Read the rest of this entry »

How to calculate risk capital on index credit spreads and iron condor options

Question:   I’m a current autotrtading customer with MCTO.  I have $20,000 of available cash in my account and I’ve set my autotrade rule to allocate $4K per trade.   I see that you recently opened a SPY Dec 108/111 bull put spread, which is a 3 point wide spread.  If I’m correct, this spread should require $300 of maintenance.   Because I’m allocating $4k per trade, I was expecting 13 of the SPY spreads to show up in my account;  however, 14 were openened.  Please explain why I got 14 of these spreads instead of the 13 that I was expecting.

Read the rest of this entry »

Why not open credit spreads and iron condors on the SPX, the S&P 500 index, instead of the SPY an ETF?

Question:  Given that the SPY is essentially 1/10 of SPX what is the point of having spreads on both? You need to buy and sell 10 times as many options on SPY to have a trade equivalent to a SPX credit spread so the commissions are worse. The tax treatment is worse. And the options are American, so there is at least the possibility of being stuck with early assignment on the short options.

Read the rest of this entry »

Question about why we recommend two accounts when trading 10 point wide credit spreads on the RUT

Question:   Having a May RUT 550/560 bear call spread in one account and a May RUT 560/570 bear call spread in another account is exactly the same as having a single May RUT 550/570 bear call spread. The Profit and Loss is exactly the same. The net Greeks are the same. The margin required is the same as the total margin required for the two separate accounts. So it makes no sense to have two accounts. Just keep the net position in one account.

Read the rest of this entry »

Older