Credit Spreading

Today I will start the bread and butter portion of my trading, the credit spread. I will be focusing on the $SPX this morning, and moving on to other instruments later in the week. I feel there are dozens of ways to set a credit spread, some people might sell a certain Delta or sell to receive a specific credit. I will normally sell almost anything 10% below the market and 6% above the market. Another way to do this is to sell below support or above resistance or sell 2 standard deviations below and 1 standard deviation above. The ways to do this are countless, but I stick to the percentage rule because I like consistency, but selling 2 standard deviations below the market is about 10% on the $SPX.

Spread Update Time

On January 7^th I set an iron butterfly and received a credit of $32.00, I sold the 1135 and had 45 point wings. Currently this trade is trading at $29.35 that’s a $2.65 profit. Below is the risk profile of my trade.