Weekly Credit Spreads - Is it Time for Call Spreads vs. Put Spreads?
I would first like to thank one of our readers who took the time to re-visit the original guidelines for weekly Put Credit Spreads published on May 12. The article can be found here: Link to Articles
The guidelines call for SPX to be above the 20 Day Moving Average. As of the close yesterday, this average is 1644.47, and SPX closed at 1612.52. Rather than re-enter a Put Credit Spread for the June cycle (expiring June 22, Option Code 130622) today, I will enter a Call Credit Spread using the same guidelines for entry (sell call strike with a delta of 15).
The graph below was snapped this morning, showing the deltas in the range for entry. Currently the credit for the -1655/+1665 call spread is $1.10. With the VIX higher than in recent weeks (closed at 18.59), I will look to sell a lower delta than 15 to get a bit further away from the underlying. These credits and deltas will change throughout the day; I will most likely wait until this afternoon before entering a new position.
SPX June Call Credit Spread Strikes
If SPX moves +/- a one day standard deviation today, it is not recommended to enter the position until the move is less than a one day standard deviation. According to my broker's platform this morning, the current one day standard deviation is 15 points.
An update will be posted with entry details.
As always, stay keen on your risk management and trade carefully.