Comments for MCTO Blog

Comment on Trade Update – Let’s pick up some premium when the unemployment number is released this Friday by bradrr

bradrr — Thu, 07 Jan 2010 20:31:55 +0000

Hi Ed,

Yes, I agree that we should bring in some modest levels of premium for tighter SPY and RUT Jan bull put spreads, per the advisory that I sent out this morning to MCTO subscribers. Unfortunately, as most of us saw, the DOW was down 60 at the open where we did have some opportunity to open some SPY and RUT Jan bull put spreads, and then the market quickly climbed back to neutral and the premium dried up in less than an hour. The market most likely will move tomorrow, Friday, when the jobs number is released so we’ll probably have another oppotunity to bring in some more premium.

Comment on Trade Update – Let’s pick up some premium when the unemployment number is released this Friday by Ed Evans

Ed Evans — Thu, 07 Jan 2010 14:56:34 +0000

Hi Brad,

Given the postive tone of the news and the probability that tomorrow’s unemployment number will be acceptable, shouldn’t we be addressing the RUT puts today since, at this point, the market is down?

If we wait for Friday’s pre market unemployment news and an update coming from you Thursday night (?) we might not get much for the puts this cycle. As of 9:55am Thursday the 570/580 put mark is $.15 and the 590/600 put mark is $.475 (if that’s a -safe- and valid possibility given the comments/response on the last trade update).

Thanks.

Comment on Index Credit Spread Options Trading Tip by Phil E

Phil E — Wed, 16 Dec 2009 04:07:38 +0000

Brad:
Since there is a lot of liquidity in single leg spreads, what do you say about opening the opposite side, long leg early at a very low price, and then wait for the oscillation to occur and open the short leg later for higher premiium?

Comment on Question about what price we use when filling our RUT, SPY and IWM credit spreads by bradrr

bradrr — Thu, 10 Dec 2009 08:53:00 +0000

Per Adam’s question, let’s use the example that we recommend the RUT Dec 640/650 bear call spread for a credit of 45 to 70 cents; and we state that if this spread starts to fill for more than 70 cents credit to cease filling it and to click-up a strike and open the new spread for between 45 to 70 cents credit. Let’s say that the 640/650 starts to fill for 71 cents credit. Per our instructions we would cease to open the 640/650, we would “click-up” and attempt to bring in at least 45 cents for the 650/660. Usually, however, if the fill price just exceeds our recommended range, the spread “one click up” will most likely not be filling yet for the 45 cents minimum. Usually, the underlying will need to climb more before the new 650/660 will start to fill for at least 45 cents. In this situation, I personally would fill the 640/650 up to the limit…maybe opening a few as high as 73 cents, but I then would pause, stop filling the 640/650 and wait a day or so until I am able to click-up to the 650/660 and bring in at least 45 cents credit. If over the next few days the underlying pulls back and the original 640/650 starts to fill again for between the recommended 45 and 70 cents range, I then would continue to bring in premium with the original spread. For most months, I recommend that we “collect” our spreads over time (put another way we are collecting premium) using 15% to 20% of our cash on each day that the recommended spreads are filling within the recommended credit price range.

Comment on Question about what price we use when filling our RUT, SPY and IWM credit spreads by bradrr

bradrr — Thu, 10 Dec 2009 08:19:36 +0000

In the ROI Results Page shown at http://www.monthlycashthruoptions.com/ReturnOnInvestment.htm we show the range of credit prices and dates that we opened the credit spreads for our own personal accounts. We follow our advisories just like our subscribers do, and this is where we pull the ROI results from. The credit price range is usually not that wide, so it does practically show the exact credit prices filled.

Comment on Questions about opening index credit spread options in the last 2 weeks of trade before options expiration by Adam M

Adam M — Thu, 10 Dec 2009 02:55:18 +0000

I would much rather trade 2-4 week spreads than 5+ weeks. There is a reason 5-week spreads pay more premium–there’s more risk! Ask me how I know…
From the ROI chart, a lot of the past spreads that went under pressure or ITM were more than 4 weeks. This year’s shorter duration spreads ended up with a higher ROI in the long run. No losing months in 09!

Comment on Question about what price we use when filling our RUT, SPY and IWM credit spreads by anthony chevalier

anthony chevalier — Fri, 27 Nov 2009 19:10:30 +0000

On this same subject, do you ever post what the exact entry is? Your overall performance would obviously be affected by how profitable your entries are and this would provide more credibility to your published performance

Comment on Question about what price we use when filling our RUT, SPY and IWM credit spreads by Adam

Adam — Fri, 27 Nov 2009 17:44:36 +0000

If the spread begins to trade for 71 cents during a very brief period one day, then the market stalls or pulls back slightly the next day putting the spread back within 45 to 70 cents, do we go ahead and fill the advised spread again or do we now remain clicked-up to the new strike since the range was “breached?” Thanks.

Comment on Question about if we can use the MCTO signals on the RUT to trade the IWM by bradrr

bradrr — Fri, 27 Nov 2009 08:12:49 +0000

We are now trading both the IWM and SPY in the autotrade accounts. If you ever see us only opening spreads on one of the indexes in a particular month, it means that we didn’t like the technicals on the other index for that month; and we’ll probably resume opening spreads on both indexes in the following month.

Comment on Question about if we can use the MCTO signals on the RUT to trade the IWM by DW

DW — Thu, 26 Nov 2009 14:50:51 +0000

Have you ever considered using the IWM in addition to SPY for autotrading? Seems there may be more potential for consistent returns if using both.