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MTM Options Trader Newsletter - Delta Can Make or Break Credit Spreads

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Sun, May 1, 2022 10:03 PM

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Delta Can Make or Break Credit Spreads One of the biggest topics I discuss in MTM’s daily Group

[image]() [image] This Week in the Market There will be a time when volatility does not control the market, but based on recent weeks and months it doesn’t appear to be anytime soon. The Dow, Nasdaq and S&P 500 are trading well below their 50-day and 200-day moving averages. Implied volatility levels have kept rising over the past couple of weeks taking option premiums to higher levels as well. Nasdaq and the S&P 500 are threatening to move below some additional horizontal support levels that have buoyed the indexes over the past couple of months. A major break below those levels could trigger a bigger selloff. While the bulk of big-name stocks have already reported, there are still many more earnings announcements scheduled for the next couple of weeks. This week is big as far as economic reports go with the latest Federal Reserve announcement coming on Wednesday afternoon. The consensus at the time of this writing is that the Fed members will vote to raise the target rate by 50 basis points. What the Fed may say after that could crank up some more volatility. As if that were not enough, the latest jobs report is up before the open on Friday. Have a safe, happy and healthy week, and don’t forget to buckle up for some more turbulent trading! May 2: Construction Spending May 3: JOLTS May 3: Factory Orders May 4: International Trade May 4: FOMC Statement May 5: Jobless Claims May 5: Productivity and labor May 6: Unemployment May 6: Consumer Credit [Read Our Blog]() Delta Can Make or Break Credit Spreads One of the biggest topics I discuss in MTM’s daily Group Coaching class is how delta can make or break a credit spread. Option traders associate credit spreads as mostly a positive theta trade. I am going to show you why I believe delta is the bigger factor usually. When you think about selling a vertical credit spread as an option trader, probably the first thing you think of is positive theta. Of course, positive theta is a very important aspect to a potential profit. But if there are more than a couple of days to go to expiration, there is another option greek that can get you to your profit destination quicker than positive theta. There are two types of vertical credit spreads: the bull put and the bear call. When selling a [Continue Reading ...]() MTM Watchlist Here are a few trade ideas we will be watching in group coaching class this week: SPY – We have been successful trading call credit spreads at various resistance levels recently. More spreads will be considered counting on resistance levels holding through the week. PG – The stock traded in a fairly tight range last week. Potential short iron condors may be looked at if that trend continues this week after we modeled out a successful bear call spread last week. GLD – Even though the ETF has dropped over the past couple of weeks, it has held its own. Bull put spreads at some potential support around $176 may be explored. [image] Secrets to Better Trade Fills: How to Make More on Winners and Lose Less on Losers Join author and options industry veteran Dan Passarelli for the May MTM Trade Smart Workshop Online Education Series and learn how market makers think so you can beat them at their own game, surprising reasons why market makers actually want YOU to make money, when it is better to use a market order instead of a limit order and what option strategies traders should never use stop orders on. Here's the full class lineup for "Secrets to Better Trade Fills: How to Make More on Winners and Lose Less on Losers": - Maximize Execution Prices - Thursday, May 5 - Beating the Market Maker at His Own Game - Thursday, May 12 - Markets, Limits and Stops: How, When and Why - Thursday, May 19 - Advanced Order Types - Thursday, May 26 [Start Now](=) The strategies in this newsletter are for educational and informative purposes only. All information disclosed in this newsletter should not be considered complete in its entirety. Market Taker Mentoring, Inc. will not be held responsible for changes, oversights, errors or omissions. Dates, prices, news and other information may not be accurate. Please verify all information before trading. You alone are responsible for your own investment decisions. Options involve risk and are not suitable for all investors. Before trading options, please read Characteristics and Risks of Standardized Option (ODD), which can be obtained from your broker; by calling (888) OPTIONS; or from The Options Clearing Corp., 125 S. Franklin St., Suite 1200, Chicago, IL 60606. No statement in this newsletter is intended to be a recommendation or solicitation to buy or sell any security or to provide investment or trading advice. Traders and investors considering options should consult a professional tax advisor as to how taxes may affect the outcome of contemplated options transactions. Copyright Market Taker Mentoring, Inc. 2008 - 2022. All rights reserved. Reproducing or redistributing this content is a violation of federal law. [image] If you do not wish to be contacted via email, you can unsubscribe using this link: [Unsubscribe]( Unsubscribing from email notifications DOES NOT cancel your class, subscription or recurring payments. We recommend that current students do not unsubscribe from email notifications. If you unsubscribe from email notifications, you will not be notified on how to access the classes or subscriptions in which you are enrolled. Market Taker Mentoring, Inc. PO Box 117 Frankfort, Illinois 60423 United States

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