Calendar Spreads

Quote from DonnaV:

Quote from DonnaV: FEB 13

SHLD... rolled the Feb 115 to Mar 120 at 5.10 leaving a diag for my June 115 and cal for June 120...reason...stock could go up in Mar at least enough to justify the upward roll have reduced debt now to 1.70 for the 115's and 4.05 for the 120's with two rolls left.


FEB 22
SHLD
In the past week the Mar 120 puts had shrunk to the pt that I decided to go ahead a roll 10 Mar 120 to April...for a credit of 2.20...leaving 5 to possibly roll later (to April 115)
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Mar 20

note to self...no more vacations during option exp week:eek:
Last Wed (I think) SHLD reported earnings and gaped up...I almost closed the position but took a little time to read more carefully the report and am naturally suspicious of extreme movement during options exp week as when there is a large short position on a stock sometimes the movement is more designed to squeez the shorts out so I did hold on. Also not being home I wasn't able to fully analysis the r/r involved. And because the primary damage was done on the gap up it was kinda pointless.

In putting on the trade which I did back on Feb 8th I knew March report could have an affect on the stock. Honestly did not believe the report would be as good as it was...although given the action on Fri and again today perhaps the earnings arn not. Anyway feeling I had time on my side I went ahead with the trade.

As stated above I did roll and adjust twice while to vol's were higher (they have come down a lot..currently April's are 30..when I put on the trade I believe was high 40's. Anyway having and taking the opportunity to roll currently my debt on the June 115's is $1.50 and the June 120's is $2.95...I could actually roll the April 120 UP to 125 (creating a diagonal) for perhaps .70 to further whittle down the debt...leaving two more rolls's April and May. If vol's increase and or direction come's back down this losing trade could still be OK. I can also have an opportunity for an IC in June for a final chance at profit.

What I've read and am understanding....Calendar spreads are often morphed into other combinations and can be a part of a larger strategy. A calendar spread can also be forgiving in that you do have some chance for a recovery where a straight put or call you don't. The only time you will lose is when you are out of roll opportunities and both your direction and your volitility projections are wrong.
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Quote from DonnaV:

Mar 20

note to self...no more vacations during option exp week:eek:
Last Wed (I think) SHLD reported earnings and gaped up...I almost closed the position but took a little time to read more carefully the report and am naturally suspicious of extreme movement during options exp week as when there is a large short position on a stock sometimes the movement is more designed to squeez the shorts out so I did hold on. Also not being home I wasn't able to fully analysis the r/r involved. And because the primary damage was done on the gap up it was kinda pointless.

In putting on the trade which I did back on Feb 8th I knew March report could have an affect on the stock. Honestly did not believe the report would be as good as it was...although given the action on Fri and again today perhaps the earnings arn not. Anyway feeling I had time on my side I went ahead with the trade.

As stated above I did roll and adjust twice while to vol's were higher (they have come down a lot..currently April's are 30..when I put on the trade I believe was high 40's. Anyway having and taking the opportunity to roll currently my debt on the June 115's is $1.50 and the June 120's is $2.95...I could actually roll the April 120 UP to 125 (creating a diagonal) for perhaps .70 to further whittle down the debt...leaving two more rolls's April and May. If vol's increase and or direction come's back down this losing trade could still be OK. I can also have an opportunity for an IC in June for a final chance at profit.

What I've read and am understanding....Calendar spreads are often morphed into other combinations and can be a part of a larger strategy. A calendar spread can also be forgiving in that you do have some chance for a recovery where a straight put or call you don't. The only time you will lose is when you are out of roll opportunities and both your direction and your volitility projections are wrong.
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I was able to get a fill on rolling up to a diagonal the 115 as well as the 120 puts for fills of 1.0 and .70 currently holding Apr125/June 115 for 5 contracts and 125Apr(puts)/120 June puts @ 10 contracts.

net debt has been reduced to .50 cents on the June 115's and to
2.25 on the June 120's. Risk however has increased...need SHLD to stay above 125 by April.
 
Quote from tuwood:

I've been doing a lot of research on the IC's as well. I'm playing with them in my virtual account & have had pretty good success.
Then again, almost everything works great in my virtual account. :D
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The advantage of calendar spreads is NO margin requirements...whereas on IC's you will have a lot of $$ tied up in the spread. Of course when you diagonalize the calendar you then have $$$tied ups as well. What I'm trying to do is figure out for the amount of dollars tied up in an IC how many calendars can you buy:p In an IRA which is where I do 99% of my trading there is no margin so I've built up a cash stash to back my IC's but really am looking for solid strategies that don't require margin.
 
Quote from DonnaV:

Whats the underlying stock symbol..also what are the greeks?
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its nokia(nok)
on twenty contracts: delta=43, gamma= -22, theta=19,vega=38.
it goes x-div on the 31st of march so need to watch the extrinsic.
 
Quote from leonnis:

its nokia(nok)
on twenty contracts: delta=43, gamma= -22, theta=19,vega=38.
it goes x-div on the 31st of march so need to watch the extrinsic.
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so you are doing a call calendar? sorry for the questions but my trading platform doesn't give the option symbol's...so I'm guessing here you did an Apr/Jul nok 20 call cal? for a debt of .55? the volatility looks good... fairly low...the only worry I would have on a call cal is that the nok is at its high for the year...but the beauty of calendars is you can be wrong in direction and still come out ok. If the dividend is large it can affect your short April call but looks like you have your bases covered. I'd appreciate know how it turns out for you. Good luck!
 
Thanks to everyone for the great dialogue on CS.

I'm somewhat new to CS and wanted some feedback on two CS that I have open right now.

1) AOC-Aon Apr/Jul 40 call spread that I opened for 1.35 debit.

2)Qcom- Apr/Jul 47.5 call spread that was opened for 1.70. I'm thinking I might need to adjust this if it continues to rally.

Thanks for any feedback.

Glenn

Also, where might there be some books or reading material to study further on CS adjustments?
 
Quote from Gburger:

Thanks to everyone for the great dialogue on CS.

I'm somewhat new to CS and wanted some feedback on two CS that I have open right now.

1) AOC-Aon Apr/Jul 40 call spread that I opened for 1.35 debit.

2)Qcom- Apr/Jul 47.5 call spread that was opened for 1.70. I'm thinking I might need to adjust this if it continues to rally.

Thanks for any feedback.

Glenn

Also, where might there be some books or reading material to study further on CS adjustments?
More...

Hi Glenn...welcome if you find any good material plz share:p There isn't too much out there on specific adjustments. Budwick/Jabour's "Option Trading Strategies and Adjustments" (I may have mangled the title) does offer some on the CS, not sure if Charles Cottle's new book specifically does. I've been collecting articles and postings for the past year on all types of strategies including CS. Of course experience is the BEST teacher thats why I've been journaling the three I opened in Jan/Feb.

If you haven't I would go to TOS's option planet and sign up for the beyond the basics's class then download their manual..it covers calendar's. You can then just xl the class if you don't want to go (its free). It offer's some guidelines for opening/rolling and closing the CS.

As far as your's they look good to me. As long as there is time premium left in the short you shouldn't have to roll too soon. TOS recomends abt 10 days prior to op ex of the short. The other option which I did on WFMI was actually roll the long call forward one month to lock in some premium. So if Qcom continues to go up then April exp you could roll the short to May and the long strike to June and collect on both ends...then close the trade in May. Good luck and plz feel free to share how you do manage the trade :)
 
Thanks for the feedback Donna-

I did go into TOS and found some good chat transcripts with Tom Preston and some other info that's pretty informative. I think your plan of a writing dialogue is the best way to learn. The good thing about CSpreads is that even if the underlying goes against you, you don't lose out too much.....at least not yet.
 
Quote from Gburger:

Thanks for the feedback Donna-

I did go into TOS and found some good chat transcripts with Tom Preston and some other info that's pretty informative. I think your plan of a writing dialogue is the best way to learn. The good thing about CSpreads is that even if the underlying goes against you, you don't lose out too much.....at least not yet.
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exactly:p
 
Quote from DonnaV:

Update on Calendars in play:

WFMI:mad: frustrating...a winning play that has become difficult to manage-down again today the March 70 short put is close to no extrensic value left leaving me vulnerable to getting put to so decided to roll and ratio.

BTC Mar WFMI 70p- (10contracts)net debt $7.20 per contract
STO Mar WFMI 65p- (20 contracts) at credit $2.70

soooo I've increased my risk and still have net debt of $1800 (total)

I did roll UP the May 72p to April 70 for a net credit of $2.60

position now is Mar/Apr diag 65(20contracts)/70 (10contracts)puts

RMBS- rolled up May30p to April30p for a net credit of 1.10
holding Mar/Apr 30 put cal.

SHLD no change
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