I started a June Weirdor/JEEP yesterday. We just moved the account I'm trading from ThinkOrSwim (TOS)to Interactive Brokers (IB) for several reasons:
– Better execution and lower commissions
– Opening the account through LiveVol will give access to LiveVol X trading software
– IB can send data to NinjaTrader, which I use
– We were just under the TOS threshold for Portfolio Margin but over for IB
The account was ready for trading this week so I started the Jun trade yesterday after getting everything setup.
RVX was around 21 so it was an ok time to start the trade. I like to start with more time to expiration, but we were waiting for the account to be activated. 42 days to expiration is still ok.
I started with a single call credit spread to refresh how to put orders into IB's Trader Workstation. The price moved down a bit from my offer so I added a second contract $0.10 lower.
Both eventually got filled.
Then I started to fill out the put side by starting with 8 delta, 20-wide put spreads at 970/950. I made the offer at the mid-price but didn't get filled. So I lowered the offer with a few more spreads which didn't get filled either!
RUT started moving up so I ended up changing my offer to the 980/960 puts when the 980 put delta were around -9. I started with three contracts at the mid. Price moved lower a bit so I offered four contracts $0.05 lower.
By the close, seven of the eight 980/960 spreads were filled.
After the 7th put spread was filled, I tried to buy a put debit spread but that never got filled.
Because this is a brand new account and the first trade with it, we can see exactly what the portfolio margin required is for the trade. I don't recall IB making the margin for a particular complex option trade available so this is a nice opportunity to see the actual margin.
Reg T margin is $13,043 and Portfolio Margin is $3,895.
Quite a difference but the Portfolio Margin will increase as the RUT moves down. The safest way to trade with a Portfolio Margin account is to treat each trade as if it were in a Reg T account. I'll reserve that amount for this trade
You'll notice on the chart at the top of this article, I posted the greeks from IB and OptionVue (OV). I have OV's “True Delta” switched on. It'll be interesting to see how these greeks change over time. I'm using the OV delta's for my trade adjustments.
If RUT keeps moving up, my plan is to peel off the calls and not sell the put debit spread. If we start moving down more than the average true range (18 points at the moment), I'll add the put debit spread to the trade.
Here are weekly and daily charts for the RUT:
The weekly price chart looks very weak to me. The daily chart confirms that to me. Until I see those moving averages broken, I'm considering the market to be in a down trend.
It's nice to trade with IB's Trader's Workstation (TWS) again. I miss the simplicity of ThinkOrSwim for putting on option spreads, but once you get the hang of it with TWS, it's not too bad.
One last point is at IB is you pay for cancellations so I don't like to chase the prices. If the price comes back to my price, that's fine. At ThinkOrSwim you don't pay these fees directly, but the higher commissions are much more. I traded 9 vertical spreads yesterday, all in single transactions. At ThinkOrSwim, at $1.25/contract, that would have been $22.50 in commissions. My commissions paid at IB was $14.94. 33.6% less!
Did you start any trades last week? What did you do?