Calendar Spreads
- Thread starter gatorplease
- Start date
Donna,
I don't really watch IV on OIH too much as it seems to move in waves, mainly staying in a 10% range. Not like my GOOG play a couple of days ago when IV was huge just before earnings (but that's another story)
My focus is on Delta and having a positive spread for as long as possible. I keep an eye on my Short when that Delta passes my long, then I follow it a bit more. I've been following oil for almost a year now and feel fairly confident on what it's moves might be. I just feel more comfortable with its fundamentals vs. a single company, too many variables! IMHO
You are right with regards to the slow decline in my OCT, but my plan of attack is to roll that forward around AUG to a MAR, before the erosion starts to pick up, but it also helps when I'm deep ITM, most of it is intrinsic.. Sometimes what I have been doing is closing out the whole position to realize the gains, then move the long several more months out etc etc. I should also mention that the OCT is from the previous mnth, so I've reduced it's cost a bit from APR. This strategy isn't too exciting, but its simple and easy to follow, so hopefully it helps others just starting out.
I think you're right about OIH being a little high, that's why I was considering selling the MAY 160's, I just need a $3 drop, but I wanted to play a little bit with the strategy. I've been mostly doing Call Calendar's as I thought OIH was just going to run until summer, which it has, but I think it's gone a little too fast. Your PUT you talk about looks interesting, I'll think I'll take a look at it. You say net Debit of $4, OCT 155P $21/ MAY 155P $11, where is the $4 coming from... sorry if this is obvious and I'm not seeing it.
As for software, I just use some simple position analysis and look at possible outcomes. I should probably use more, but things have been going so well that I really haven't dug deeper. I'll be honest I'm not a Pro, I just sort of chip away.
No, I don't work in the industry. Just a close follower.
Let me know if you do the PUT Cal. I'm interested to see how it works.
Jason
I don't really watch IV on OIH too much as it seems to move in waves, mainly staying in a 10% range. Not like my GOOG play a couple of days ago when IV was huge just before earnings (but that's another story)
My focus is on Delta and having a positive spread for as long as possible. I keep an eye on my Short when that Delta passes my long, then I follow it a bit more. I've been following oil for almost a year now and feel fairly confident on what it's moves might be. I just feel more comfortable with its fundamentals vs. a single company, too many variables! IMHO
You are right with regards to the slow decline in my OCT, but my plan of attack is to roll that forward around AUG to a MAR, before the erosion starts to pick up, but it also helps when I'm deep ITM, most of it is intrinsic.. Sometimes what I have been doing is closing out the whole position to realize the gains, then move the long several more months out etc etc. I should also mention that the OCT is from the previous mnth, so I've reduced it's cost a bit from APR. This strategy isn't too exciting, but its simple and easy to follow, so hopefully it helps others just starting out.
I think you're right about OIH being a little high, that's why I was considering selling the MAY 160's, I just need a $3 drop, but I wanted to play a little bit with the strategy. I've been mostly doing Call Calendar's as I thought OIH was just going to run until summer, which it has, but I think it's gone a little too fast. Your PUT you talk about looks interesting, I'll think I'll take a look at it. You say net Debit of $4, OCT 155P $21/ MAY 155P $11, where is the $4 coming from... sorry if this is obvious and I'm not seeing it.
As for software, I just use some simple position analysis and look at possible outcomes. I should probably use more, but things have been going so well that I really haven't dug deeper. I'll be honest I'm not a Pro, I just sort of chip away.
No, I don't work in the industry. Just a close follower.
Let me know if you do the PUT Cal. I'm interested to see how it works.
Jason
RD--shoulda/coulda/woulda
Jason thanks for answering my questions so thoroughly. I will be very interested in following your OIH trade and how you handle it. Calendar's are not daytraded (very often
) so you will not be expected to give a daily update! But I will certainly follow.
And I was looking at July's prices not OCT so need to rethink and look some more. Looks like OCT/MAY 155's would cost $7 and change. I'll do a spread with just a few contracts to get a feel. I certainly agree that OIH is easier then the individual co's.
I do have and have traded CVX with reasonable success..mainly selling straddles on it and sometimes extra puts farther out (in months) It has been very rangebound..only lately making a move but it's been as high as 65 so could get there again.
Jason thanks for answering my questions so thoroughly. I will be very interested in following your OIH trade and how you handle it. Calendar's are not daytraded (very often
) so you will not be expected to give a daily update! But I will certainly follow.And I was looking at July's prices not OCT so need to rethink and look some more. Looks like OCT/MAY 155's would cost $7 and change. I'll do a spread with just a few contracts to get a feel. I certainly agree that OIH is easier then the individual co's.
I do have and have traded CVX with reasonable success..mainly selling straddles on it and sometimes extra puts farther out (in months) It has been very rangebound..only lately making a move but it's been as high as 65 so could get there again.
I'm looking at my screen now and there is a TON of interest in the May/Jul 155's over 10X as much as int in OCT.
Donna,
Oops.. shows how long I've been looking at the Call side.. as that's what I was quoting you with your PUT Cal. So now I see what you're saying... geez
Oops.. shows how long I've been looking at the Call side.. as that's what I was quoting you with your PUT Cal. So now I see what you're saying... geez
funny how we need to look at both sides of the page
Funny that you mention daytrading a Diagonal Cal.. cause that's what I did with GOOG. I figure someone else must have played this if there are a lot of people playing Volatility.
Day before earnings:
BTO SEPT 390 $53
STO APR 430 $5.8
Post- Earnings*
SEPT 390 $81
APR 430 $19
*this is the value of each leg when I rolled my APR 430 to a MAY 450 @ $18.7
not too bad gain for 2 days.. approx $14.8/contract. If I waited until close it would have been $18.8. A little away from my game plan, but oh well. Maybe a little risky, but the premiums are sooo good.
Day before earnings:
BTO SEPT 390 $53
STO APR 430 $5.8
Post- Earnings*
SEPT 390 $81
APR 430 $19
*this is the value of each leg when I rolled my APR 430 to a MAY 450 @ $18.7
not too bad gain for 2 days.. approx $14.8/contract. If I waited until close it would have been $18.8. A little away from my game plan, but oh well. Maybe a little risky, but the premiums are sooo good.
Thats great! I'd be bragging a little bit too on that one I just can't trade GOOG myself..tried it but chickened out which turned out to be a good thing. So difficult to game something with that kind of unknown and volatility.
I just can't trade GOOG myself..tried it but chickened out which turned out to be a good thing. So difficult to game something with that kind of unknown and volatility.OK Pipe...woke up early with an idea of what I'm going to do.
now I'm looking a little more OTM...Buy OCT 150(12contracts)
sell May 155 (10 contracts) a ratio diagonal put cal. The more I thought and looked at the charts of OIH the more I think the trend may be down on the next few months and If it continues up I can continue to sell the higher strike month to month. If it goes down strongly then having the extra 2 contracts helps offset any adjustment down to a reg cal (ie I'll then sell 12 June 150's).
I'll post my fills after the mkt opens.
now I'm looking a little more OTM...Buy OCT 150(12contracts)
sell May 155 (10 contracts) a ratio diagonal put cal. The more I thought and looked at the charts of OIH the more I think the trend may be down on the next few months and If it continues up I can continue to sell the higher strike month to month. If it goes down strongly then having the extra 2 contracts helps offset any adjustment down to a reg cal (ie I'll then sell 12 June 150's).
I'll post my fills after the mkt opens.
Funny...I just opened up this am "RealMoney" issue and Steve smith on options blog is saying one way to play the oil issue is sell some prem on the oil ETF's and buy a strangle on the individual components
I guess everyone is trying to game this one. It's a good idea but as he says the trick is finding the right underlying to strangle.....
I guess everyone is trying to game this one. It's a good idea but as he says the trick is finding the right underlying to strangle.....