I just started trading SPX vertical bull put spreads. Had a few winners but am not sure about picking the right credit prices. It seems like system always recommends mid prices for opening or closing positions. I have been going along with that but is there a better strategy to select open/close prices? How much higher than a mid price for open and lower than a mid price for closing is realistic?

Thanks John

1 Answer 1


There are no rules or metrics for this. Getting a fill at a better price than the natural (say the midpoint or better) is merely a function of a counter party willing to meet you there. If the liquidity is good, it's more likely. If not, less likely.

On active days when the market is moving up or down a lot, traders are active and chances are better that you'll get a better fill. On dead days, much less likely.

You could start at say 75% of the spread. If no takers, move the order down toward the midpoint, accepting a lower credit.

Part of the decision making process is what's your reason for taking the position? If you're trading a momentum strategy and you really want the position, you're going to have to accept less. If your time frame is longer and perhaps you're chasing time premium decay and an entry price for purchase of the underlying, you can work the order. Just keep in mind that if you work the order, you run the chance of not getting a fill.

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