One for two this week: small /ES (lost) and SPX (won) call spreads; new exchanges!

I looked at a 4-day QQQ and a 4-day NDX trade and the QQQ was too small and NDX more risk than I wanted to take, so instead last Sunday afternoon I put on an /ES short call spread: short the 2570 call and long the 2580 call.

This was transfixing because of the reward to risk ratio: $150 / $350 =  42.8% in four days! (Less commissions.)

Would that it were so:

Fortunately for one of the account holders for whom I'm trading, the person doesn't have futures access. So I put on an SPX call spread for her on Monday a.m., by which time the market was up enough that I put on the SPX call spread: short the 2605 call and long the 2610 call. This was for an 85 cent credit ... reward to risk ratio wasn't nearly as good as the /ES but still not half bad: $85 / $415 = 20.8%. Fortunately, this one won!

I'm not much into technical analysis, but had I paid attention to Tim Knight I'd have saved a little money ... he's saying we're still in a pattern that's headed lower, and his Fibonacci retracement line ... is at 2603.

I'm going to start watching him a little more closely, even though I'm still skeptical of technical analysis as a discipline ... but basically I'm planning to just trade small while waiting for the opportunity of the "fabulous NDX trade" ... which comes up again next week.

New Exchanges Coming

There were a couple of new exchange announcements last week, one from a bunch of big companies ... and one from my favorite brokerage:

The Small Exchange is from Tom Sosnoff and the Tastytrade/Tastyworks gang. They're not divulging details (other than a vague mention that products will be "smaller" than standard futures products now existing.) But I think I can imagine what this will be:

• Smaller notional values
• Standard options values, not like /ES = $50 and /NQ = $20, etc. Probably all will be $100 like current equity options
• SPAN margining (like the current futures markets)

Also ... Sosnoff's announcement of this downplayed the possible appreciation of the membership in this exchange, available free with a new funded Tastyworks account ($2000 or more) and $100 for everbody else. If the thing succeeds, these memberships could be worth a lot more ... and offer any trader a 50% cut in the already-low fees, so should be much less than standard futures fees ...

Unfortunately:

The U.S. government shutdown continues, including the SEC. This is stalling not only IPOs but these new exchanges from getting any motion toward approval.

More next week ...