Let's Trade Options

(translating SPY to SPX)....Ravish is doing 2 weeks out and 1 week wide in the time spreads. 1 week wide will be too much to pay for SPX.

I still look at 1 week out, the Fri-Monday spread, typically looking at -00 or -50's 200 pts wide, but I also go another dbl cldr on top of that, 2 weeks out, again the Mon-Fri spread, and 300pts wide. Looking to come off the front dbl cldr a day b4 expiry & let the wider set ride into the following week, where I will start a new 4-cldr set, or iteratively add another 2-week set.

Underneath time spreads like these I am usually doing 0dte flys most days. If needed, I will use proceeds from those to roll the calendars so they have a chance of finishing in the fat part of their profit range.

comparable to the cldr is a diag with a wide fly set beyond it to help cover the diag tail risk. The 2 trades below both need about $2800 debit. Similar b/e's but the profit performance of the combo could be better. If SPX moves beyond the diag b/e, you might close it for small loss and still get a large profit out of the fly. Downside is the bp hit for the diagonal.

A Fri-Monday diag-fly combo. These can be structured with no-debit, no downside risk. As shown I have factored in a 2% iv drop. The iv drop may not be very much, since SPX iv's are already deflated. Anyway, the iv drop will occur, to some extent, if SPX runs up, and the that will hurt the diag but benefit the fly.

I will watch SPX and put this on after there has been a good run up - you don't want to catch further large upside. The 2nd pic shows what can happen if things work out well to expire the diag short strike and then catch a Monday bull move...the general plan is to close on Thurs-Friday, though. No need to be a hero.