Comments on: Well Don Winton says… http://traderpsyches.com/well-don-winton-says Trading Psychology, the Thinking Man's Market Psychology Thu, 13 Oct 2011 21:28:50 +0000 hourly 1 http://wordpress.org/?v= By: thomas_shawn http://traderpsyches.com/well-don-winton-says/comment-page-1#comment-1766 thomas_shawn Sun, 02 May 2010 11:27:03 +0000 http://traderpsyches.com/?p=2387#comment-1766 Oh, I understand that much and have sold tons of puts for credit but never ITM. I guess I'm just used to selling OTM, @ that 30-50% probability of expiring ITM range , always allowing a flat market to give me some profits, always going hitting a single or a double. Yours, to me, looks like it'd be a grand slam. Oh, I understand that much and have sold tons of puts for credit but never ITM. I guess I’m just used to selling OTM, @ that 30-50% probability of expiring ITM range , always allowing a flat market to give me some profits, always going hitting a single or a double.

Yours, to me, looks like it’d be a grand slam.

]]> By: DKS http://traderpsyches.com/well-don-winton-says/comment-page-1#comment-1763 DKS Tue, 27 Apr 2010 00:55:43 +0000 http://traderpsyches.com/?p=2387#comment-1763 Let's walk through the elements... if I sell a put... I sell the right to someone else to sell the "stock" at that price. So if I sell a 130 put .... someone out there has the right to "put" the 130 June SPY put to "someone".... or someone has the right to sell SPY at 130 regardless of where it is trading. What I have at that point is whatever premium I took in for selling that. What happens next .... ? Let's say the market goes to 128? 132? What happens next? Let’s walk through the elements… if I sell a put… I sell the right to someone else to sell the “stock” at that price. So if I sell a 130 put …. someone out there has the right to “put” the 130 June SPY put to “someone”…. or someone has the right to sell SPY at 130 regardless of where it is trading.

What I have at that point is whatever premium I took in for selling that.

What happens next …. ?

Let’s say the market goes to 128?

132?

What happens next?

]]> By: thomas_shawn http://traderpsyches.com/well-don-winton-says/comment-page-1#comment-1762 thomas_shawn Mon, 26 Apr 2010 22:03:52 +0000 http://traderpsyches.com/?p=2387#comment-1762 ITM put spread selling on a market you are bullish about ... I'm very confused as to what this trade is. ITM put spread selling on a market you are bullish about … I’m very confused as to what this trade is.

]]> By: MarkWolfinger http://traderpsyches.com/well-don-winton-says/comment-page-1#comment-1758 MarkWolfinger Thu, 22 Apr 2010 17:01:51 +0000 http://traderpsyches.com/?p=2387#comment-1758 I was a CBOE market maker also (23 years). If there is really a 5 cent differential, then I absolutely agree that you should save that 5 cents. I just know that if I'm willing to pay $4.20 (as a market maker) for that ITM put spread, then I'd be even more eager to sell the corresponding call spread @ $0.80. The P/L is equivalent an I get to save a bit on interest. Thanks http://blog.mdwoptions.com I was a CBOE market maker also (23 years).

If there is really a 5 cent differential, then I absolutely agree that you should save that 5 cents.

I just know that if I’m willing to pay $4.20 (as a market maker) for that ITM put spread, then I’d be even more eager to sell the corresponding call spread @ $0.80. The P/L is equivalent an I get to save a bit on interest.

Thanks
http://blog.mdwoptions.com

]]> By: DKS http://traderpsyches.com/well-don-winton-says/comment-page-1#comment-1757 DKS Wed, 21 Apr 2010 23:07:34 +0000 http://traderpsyches.com/?p=2387#comment-1757 Well he was on the CBOE floor for a lot of years... and he did make a lot of money... so without calling him, yes I am sure he knows that. In fact, even in my neophyte state I know that. I think the issue is however that on the ITM puts the bid-ask spread is wider... and therefore my actual fill on the trade will have more play in it than the fill on an OTM call spread. In fact, using thinkorswim's "thinkback" facility it looks to be about a 5 cent differential. Granted that only amounts to about $50 on the total trade but the call spread plays out with $180 risk so 50 smackaroes is relevant. But I will be happy to transcribe his reaction when I get him on the phone... Well he was on the CBOE floor for a lot of years… and he did make a lot of money… so without calling him, yes I am sure he knows that. In fact, even in my neophyte state I know that.

I think the issue is however that on the ITM puts the bid-ask spread is wider… and therefore my actual fill on the trade will have more play in it than the fill on an OTM call spread.

In fact, using thinkorswim’s “thinkback” facility it looks to be about a 5 cent differential. Granted that only amounts to about $50 on the total trade but the call spread plays out with $180 risk so 50 smackaroes is relevant.

But I will be happy to transcribe his reaction when I get him on the phone…

]]> By: MarkWolfinger http://traderpsyches.com/well-don-winton-says/comment-page-1#comment-1756 MarkWolfinger Wed, 21 Apr 2010 22:37:30 +0000 http://traderpsyches.com/?p=2387#comment-1756 This so-called options expert is wrong. Any market maker who would take the other side of your call spread would take the other side of the put spread. The positions are equivalent. Doesn't your buddy know that? This so-called options expert is wrong.

Any market maker who would take the other side of your call spread would take the other side of the put spread.

The positions are equivalent. Doesn’t your buddy know that?

]]>