UNDERSTANDING OEX OPTION SPREAD TRADING STRUGGLE ( report # 10 )

My struggle to understand OEX Option Spread Trading Report # 10

There is lots of information on the internet about OPTION SPREADS for trading.

I've pretty much exhausted my enquiries about POSITION TRADING and faster QUICKI SHORT trades and have devised my trading methodologies for both. Now is the time for the results to show up in my currently losing VIRTUAL BROKERAGE ACCOUNT with funny money. ( see below )

So the past week or so I've been studying SPREAD TRADING. The reason for Spread Trading, is that the OEX INDEX often and mostly moves in a bull trend very slowly. The volatility dies down and you are only getting 1 or 2 OEX index points at the end of each day and not every day either. With TIME DECAY that is a bummer. I kind of made money on one long call position, just closed this week, that I instigated a long time ago and fortunately I put it out at 3 months, so TIME DECAY was minimal. My 2 month option OUT distance, didn't do near as good. It made money, but not much.
TIME DECAY being the problem in the slow OEX BULL MARKET TREND, for low volatility I got interested in SPREADS. They say TIME DECAY works for you and so long as you put on a BULL SPREAD, you will make money as the PREMIUM expands. I'm paper trading one of these from this past week and so far, the premium is not doing anything. Even though the Index has moved about 4 points in my favor at times.
TRIAL AND ERROR learning is what this is.
Where I really got confused is that the internet advisors are mixing up the spread names. I finally figured out that a BULL SPREAD for some people is actually a VERTICAL CALL SPREAD and for others a VERTICAL CALL SPREAD is a CREDIT SPREAD.
You switch the BUY and SELL of the two strikes in either a BULL SPREAD that I wanted as a position TIME DECAY, or the BULL/VERTICAL SPREAD as a CREDIT spread.
The difference seems to be that one SPREAD IS A DEBIT SPREAD, the other is a CREDIT SPREAD
The difference is not only in the way you put it on. Concerning the Buying and Selling of one strike apart options. One is a DEBIT SPREAD and you are supposed to make your money from TIME DECAY on the selling side. That's what it says anyway? So far this week, mine has not expanded the PREMIUM DEBT the way they say. We shall see by the end of next week, which is Expiration FRIDAY. I don't quite understand that part, but I learn by doing; so if my PREMIUM on paper actually spreads we will see when I theoretically close it out, if it makes money. The premium DEBT was $3.30 and it is hovering still around that number so far.

THE CREDIT SPREAD gives you a PROFIT, or CREDIT when you sell the more expensive option and if you go to expiration, you get to keep the CREDIT. I've got an experiment on paper for one of those running also. The trick is that the INDEX has to be above your starting point of putting on the SPREAD. Not sure that is going to happen, but if the INDEX threatens to return back to your INDEX starting point, the internet option gurus say; you must close it out and take your losses. As if the dropping index market action, goes past your index starting point, you LOSS gets very big indeed. A DANGEROUS SPREAD the Credit Spread.
What I want I guess; is the other BULL SPREAD, the DEBIT BULL SPREAD, so it can be closed out at any time. However waiting for TIME DECAY to widen the PREMIUM, is like watching the pot for the water to boil. Aggravating so far.
This learning business is so slow! I hope I have cleared up the confusion in my own mind and the results this week prove out that I'm on the right track?
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I'm finally coming to the conclusion it is better to just buy plain puts or calls?
The Condor Spread was interesting. But all SPREADS are apparently directional. If you have to go directional, you might as well go long, puts or calls. It is a lot easier to exit your positions. With the CONDOR spread, a channel set of CREDIT SPREADS, one loss still wipes out a month and a half of profits, presuming you got your exit fast and correct. If you could limit the CONDOR SPREAD CHANNEL to defined conditions and only traded them at that time. You might do okay, like any strategy. I learned about the WEEKLY EXPIRATION options from the PEAK INVESTMENT site. I thought that was interesting to know?
Position trading and quickie trading is a different ball game. If done right you can make it work. The trick I'm convinced; is to watch the volatility and have good market TIMING. I don't find it too hard to do the market timing. You can manage your losses. The biggest problem is the TIME DECAY. TRUE RANGE is a daily need. Low ranging days of low volatility you just stay out of the market. The best strategy for LONG option purchases I believe so far, is learning when to stay out of the market and hold on to your cash and watch. Without overtrading.
I think I'm going to forget Spread Trading. For low volatility, low TRUE RANGE days and TIME DECAY, just have to learn to sit on the market sidelines when conditions are not favorable. You don't have to over trade, or trade constantly. Though the addiction and urge is there. By staying out of the market in bad conditions, you improve your win to loss ratio and bottom profit line. That is my conclusion! Think I'll skip SPREAD TRADING.
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website: http://oexoptiontradingexperience.blogspot.com