Calendar spreads

Calendar spread is...

  • Very good strategy

    Votes: 37 62.7%

  • Good for moving sideways markets only

    Votes: 31 52.5%

  • Too little profit strategy

    Votes: 15 25.4%

  • Losing strategy

    Votes: 8 13.6%
  • Total voters
    59
Quote from vega:

I posted this originally in the thread regarding the new VIX futures, but I wanted to share this again. OK Don, so you like being short gamma, then this could be the best thing in the world for you and your bro. Let's say the VIX future is trading at 26, you sell the 28 put, which makes you short gamma, collecting decay, and LONG VOLATILITY BEING SHORT OPTIONS !!! Take it a step further and go ahead and sell the 24 call too. Now you're flat (delta) in the VIX future, flat vega (being short twice as many options also), and collecting on both the call and put. Don, I think you should open another Bright office in Chi-town, and put me and Mav in charge !!!!!!!!!!!!

Vega:D
More...

Amen brother!
 
I get a head ache thinking of all the different ways to use this new contract. This (vix) seems like something that will really turn into a useful product. When's the last time that happened ???:eek: :eek:

Vega:D
 
Quote from vega:

I posted this originally in the thread regarding the new VIX futures, but I wanted to share this again. OK Don, so you like being short gamma, then this could be the best thing in the world for you and your bro. Let's say the VIX future is trading at 26, you sell the 28 put, which makes you short gamma, collecting decay, and LONG VOLATILITY BEING SHORT OPTIONS !!! Take it a step further and go ahead and sell the 24 call too. Now you're flat (delta) in the VIX future, flat vega (being short twice as many options also), and collecting on both the call and put. Don, I think you should open another Bright office in Chi-town, and put me and Mav in charge !!!!!!!!!!!!

Vega:D
More...

I love selling the "strangles" ... I love the time decay coming our way. Gotta keep close to the position, and adjust according with price.....

Sounds like you're probably better off trading than "managing an office"... that might take time away from your trading.

Oh, yeah....to Mav:...Glad you made me actually pull up an option screen (had to dust it off)....this proves my initial concern of whacko markets to try to trade... (3.00 bid offered at 3.30...a 10% spread...how in the heck can you expect to trade that?...pretty tough)...but (so as to not "dodge" your question)...a simple example.

Sell BBY Nov 55, Buy Dec 55 Calls, and pay 80 cents. Stock is now 57.13. Selling Nov's at 3.30 (offer), Buy Dec at 4.10 (bid)....(Yeah, I know, tough to buy on bid and sell on offer if you're not on the floor)....but just for an example I would like this spread. Ratio as stock price moves, all the while collecting time decay.

Not the best, just an example...I didn't bother running any filtering program, just pulled up the first stock on my list.

Feel free to "fire away" if you must with all the technical reasons that I shouldn't have this basic spread on to trade around.

Don :confused:
 
Quote from Don Bright:



I love selling the "strangles" ... I love the time decay coming our way. Gotta keep close to the position, and adjust according with price.....

Sounds like you're probably better off trading than "managing an office"... that might take time away from your trading.

Oh, yeah....to Mav:...Glad you made me actually pull up an option screen (had to dust it off)....this proves my initial concern of whacko markets to try to trade... (3.00 bid offered at 3.30...a 10% spread...how in the heck can you expect to trade that?...pretty tough)...but (so as to not "dodge" your question)...a simple example.

Sell BBY Nov 55, Buy Dec 55 Calls, and pay 80 cents. Stock is now 57.13. Selling Nov's at 3.30 (offer), Buy Dec at 4.10 (bid)....(Yeah, I know, tough to buy on bid and sell on offer if you're not on the floor)....but just for an example I would like this spread. Ratio as stock price moves, all the while collecting time decay.

Not the best, just an example...I didn't bother running any filtering program, just pulled up the first stock on my list.

Feel free to "fire away" if you must with all the technical reasons that I shouldn't have this basic spread on to trade around.

Don :confused:
More...

OK, Don, after the close today BBY announces 5 billion dollar stock buyback. Also they raise their sales estimates for next qtr. Stock is trading at 65 bid 67 offer after the close.

What's the plan now?
 
OK, Don, after the close today BBY announces 5 billion dollar stock buyback. Also they raise their sales estimates for next qtr. Stock is trading at 65 bid 67 offer after the close.

What's the plan now?
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His Plan? To call his brother.
 
Quote from Hello_Dollars:



His Plan? To call his brother.
More...

That's classic............

Because he owns the farther outs, he may not have as much bloodshed due to the increase in vol across the board if that news came out, but obviously he loses being short deltas in that case.

You know Mav, it's things like that scenario that really drive NOMORE crazy !!!! Damn MMs and their tricks:p :p

Vega:D
 
Quote from Maverick74:



OK, Don, after the close today BBY announces 5 billion dollar stock buyback. Also they raise their sales estimates for next qtr. Stock is trading at 65 bid 67 offer after the close.

What's the plan now?
More...

After calling my brother (cute!!).... I would have 2 sets of calls at 100 delta and have a max loss of 80 cents. And, if that is the worse thing that happens to me (even today, lol), "who cares"? Can't plan your trading on "worse case" scenerios, or else you would be driving a truck for living, sooner than later.

Oh yeah, since I would have a few extra far out calls, I would probably lose less than 80 cents....

OK, now I have to get back to it before the close....another up day, who woulda thought?

Don
 
Quote from Don Bright:



After calling my brother (cute!!).... I would have 2 sets of calls at 100 delta and have a max loss of 80 cents. And, if that is the worse thing that happens to me (even today, lol), "who cares"? Can't plan your trading on "worse case" scenerios, or else you would be driving a truck for living, sooner than later.

Oh yeah, since I would have a few extra far out calls, I would probably lose less than 80 cents....

OK, now I have to get back to it before the close....another up day, who woulda thought?

Don
More...

Yeah Don but you never would have gotten the bid and offer on those prices. That spread would have cost you like a dollar at least. Now lets say you do that spread 100 times. That's 10k!!!!. Now even then you may say well 10k isn't that much. But how much money are you really making when that doesn't happen. That one trade will wipe out everything you made on the last 5 plays bringing you back to square one. So where is the upside in this strategy? And this is a safe example you gave. Earlier you were talking about selling gamma like a fool and I think your brother slapped some sense into you. LOL. But even with this moderately conservative play, I just don't see how you are going to be basking in the sun with that tiny theta you are going to collect on such a small spread like that one you mentioned. And all it takes is for a gap one way or the other and you give back all those tiny little profits you made.

No wonder you started a prop firm. If this really did work as well as you thought it would you would be sipping pina`coladas from the islands. Not easy huh Don?
 
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