You might have to buy them 10 at a time although I think with qqq you can do 20 at a time if I'm not mistaken.
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Calendar spreads
- Thread starter ChrisM
- Start date
You might have to buy them 10 at a time although I think with qqq you can do 20 at a time if I'm not mistaken.
Quote from Maverick74:
You might have to buy them 10 at a time although I think with qqq you can do 20 at a time if I'm not mistaken.
Mav, you are so great at answering, I can't help but ask a question off the topic of this thread (i.e., calendars) so here goes:
What about taxes? Options on broad based indices get section 1256 treatment (60% LT 40% ST cap gains taxes) while equity options are taxed 100% as short term cap gains. Does this influence your trading strategy?
Quote from TempusFugit:
Mav, you are so great at answering, I can't help but ask a question off the topic of this thread (i.e., calendars) so here goes:
What about taxes? Options on broad based indices get section 1256 treatment (60% LT 40% ST cap gains taxes) while equity options are taxed 100% as short term cap gains. Does this influence your trading strategy?
Actually what if I told you there was a way you could trade equity options and get 60/40 tax treatment, would you be interested?
Quote from Maverick74:
Actually what if I told you there was a way you could trade equity options and get 60/40 tax treatment, would you be interested?
Only marginally because I don't believe in taking on firm-specifc risk (U of Chicago trained...I can't help it). But I'm sure others would be very interested so please do tell.
Quote from TempusFugit:
Only marginally because I don't believe in taking on firm-specifc risk (U of Chicago trained...I can't help it). But I'm sure others would be very interested so please do tell.
Well I don't want to publicly advertise for them without their consent. If you want to PM me you can but like you said, you'll have to take on firm specific risk but you'll get 60/40 tax treatment and it's 100% legal.
Quote from Hello_Dollars:
Chris,
Interesting. We should compare notes.
With regard to your question, I'm not sure what you mean by "dual IC's". Could you give me an example?
HD
HD,
I have been watching your ICs for a while and have to say that I am impressed of idea of defending such position by converting them into long butterflies but not very impressed of idea of buying them back.
My studies show that many times the market reverses nad comes back.
If you don`t mind sharing your experience, I would be very interested what is your opinion concerning this issue.
Regards
Chris,
I agree. I rarely if ever buy back the short options, unless they're trading for pennies and I want to remove risk entirely from that side. Converting to a butterfly or a long condor, in my opinion, is a much better adjustment assuming there isn't any major pricing issue.
I'd also mention that there are other ways to hedge the risks of the IC besides adjusting the position. For example, since I view my iron condors as a component of a larger portfolio, even though its my "core" position, I've been using a basket of long/short leaps to increase my overall vegas. I've also started using the ES to neutralize my portfolio deltas. Doing so has enabled me to sit with my iron condors for the several weeks it takes them to play out without the usual level of stress that accompanies a sharp market move.
By the way, for those interested, I've recently decided to ditch the XEO in favor of the SPX. The liquidity in the XEO has been horrendous of late, and, as a result, its been near impossible to get spreads on in any kind of size.
HD
I agree. I rarely if ever buy back the short options, unless they're trading for pennies and I want to remove risk entirely from that side. Converting to a butterfly or a long condor, in my opinion, is a much better adjustment assuming there isn't any major pricing issue.
I'd also mention that there are other ways to hedge the risks of the IC besides adjusting the position. For example, since I view my iron condors as a component of a larger portfolio, even though its my "core" position, I've been using a basket of long/short leaps to increase my overall vegas. I've also started using the ES to neutralize my portfolio deltas. Doing so has enabled me to sit with my iron condors for the several weeks it takes them to play out without the usual level of stress that accompanies a sharp market move.
By the way, for those interested, I've recently decided to ditch the XEO in favor of the SPX. The liquidity in the XEO has been horrendous of late, and, as a result, its been near impossible to get spreads on in any kind of size.
HD
Quote from Hello_Dollars:
Chris,
I agree. I rarely if ever buy back the short options, unless they're trading for pennies and I want to remove risk entirely from that side. Converting to a butterfly or a long condor, in my opinion, is a much better adjustment assuming there isn't any major pricing issue.
I'd also mention that there are other ways to hedge the risks of the IC besides adjusting the position. For example, since I view my iron condors as a component of a larger portfolio, even though its my "core" position, I've been using a basket of long/short leaps to increase my overall vegas. I've also started using the ES to neutralize my portfolio deltas. Doing so has enabled me to sit with my iron condors for the several weeks it takes them to play out without the usual level of stress that accompanies a sharp market move.
By the way, for those interested, I've recently decided to ditch the XEO in favor of the SPX. The liquidity in the XEO has been horrendous of late, and, as a result, its been near impossible to get spreads on in any kind of size.
HD
HD,
I have been doing similar researches for some time and I am about the same conclusions and actually thinking about using ES, OEFs and similar index related instruments to hedge my positions. I was also thinking about long LEAP strangles and few others.
I am not surprised about your switch from XEO, while liquidity of it has kept me away of this contract for some time, however as well as I remember one of the reasons for using XEO by you was Euro style of these options, taking the risk of early assignment away, but SPX is purely American, isn`t it ?
I use OEX for S&P and so far have not experienced any early assignments, but I know that risk is always there.
Quote from ChrisM:
I am not surprised about your switch from XEO, while liquidity of it has kept me away of this contract for some time, however as well as I remember one of the reasons for using XEO by you was Euro style of these options, taking the risk of early assignment away, but SPX is purely American, isn`t it ?
I use OEX for S&P and so far have not experienced any early assignments, but I know that risk is always there.
Chris,
SPX is European style.
HD
Quote from Hello_Dollars:
Chris,
SPX is European style.
HD
HD,
Oooops, sorry, but good to know.
Also, if you don`t mind sharing - can you explain how do you cover ICs by converting them into long condors - do you stack them on the top of each other or something else ? While long bflies are understandable I am not sure whether I catch the idea of IC/long condor.
Thx,