Calendar Spreads

Update on Current Calendars:

WFMI..booked an $800 loss on the extra 10 contracts written last week...original Calendar however is currently profitable:

Have a Mar/April shortMar65/longApr70 put diagnal with the original debt now whittled down to -2.75 a contract. Current value of spread +4.55

RMBS thru rolling both the short and the long now am down to .55 net debt...value of current Mar/Apr 30p cal is +2.35

SHLD a 5 contract Apr/June 115p cal after rolls net debt 1.15
.......the 10 contract Apr/June 120 p cal after rolls net debt 2.95

pleasantly suprised at how quickly the hefty debt on SHLD was whittled down:cool:
 
for anyone who is interested...another attractive put calendar candidate is AMD...did an Apr (vol was abt 47) July (vol at 43) 37.5p calendar for $1.35 net debt ( the april premium paid more than %50 of the Jul Prem) won't add this trade to the Journal...when I close the existing ones I'll hop off this train:p
 
Quote from Bben1006:

Regarding SHLD:

Take a look at the most recent posting of the 'Techo-guy' at
http://gotfrank.com/stockpicks/. He gives a good narration of the fight....

Ben
More...

It really is an interesting chart...talk about trading range over a long period of time. That is why I thought it might be a good calendar candidate...so far so good:)
 
I posted about getting back into calendar spreads over on yahoo and Donna kindly pointed me to this thread.
I can say that I have enjoyed reading through it and have learned quite a bit about using Put's versus Calls on Calendar spreads.

I am a deciple of the Terry's Tip's calendar call strategy, and did them for several months with mixed success. For those not familiar, it's the concept of buying a leap call and then selling a near month call month after month and make income on the near term Theta being greater than the LEAP's.

I have a current position on with this strategy in mind, but am seriously considering adjusting it. I know where my risk zones are with this strategy, but I'll admit that I didn't really take Volatility into account. (common newbie mistake, I'm sure).

Here's my current position, feel free to comment.
STO 6 x QQQQ MAR 41 Call
BTO 6 x QQQQ JAN 2007 41 Call

After reading this thread I started looking at several nearer term calendar put spreads and notice that with the $1800 I have tied up in this trade, I have the potential of making approx $200 in Theta (at best) this month whereas I could put on a Mar/Jun 41 put spread (for example) and have a greater potential profit zone with only $700 at risk. Then I could diversify the other 1800 somewhere else.

Also, I am fairly stuck on the Index's because I was burnt badly with "event" hits on equity stocks in the past.

Thanks in advance.
 
With shorter term Calendar Spreads you encounter different risks. You need to realize that if the underlying goes against you... you'll have less time for it to recover.

What I have done in the past is buy stocks or indexes which have found a long term solid pull back to long term support... ie, INTC. This gives you better odds that the underlying has found a base.... then trade (sell) your short term calls against that position, only when the position has reached a resistance or over bought conditoin.

You'll be much more successful..... if you have a trading plan with TA behind your decisions.

Murray
 
Quote from Sailing:

With shorter term Calendar Spreads you encounter different risks. You need to realize that if the underlying goes against you... you'll have less time for it to recover.

What I have done in the past is buy stocks or indexes which have found a long term solid pull back to long term support... ie, INTC. This gives you better odds that the underlying has found a base.... then trade (sell) your short term calls against that position, only when the position has reached a resistance or over bought conditoin.

You'll be much more successful..... if you have a trading plan with TA behind your decisions.

Murray
More...

I agree with what your saying, but I'm sensing that not many of you are using LEAPS on your calendar spreads.
from a calendar call/put perspective how far out do you typically buy your long postion?

I actually do use TA a lot, but I'll admit that I usually use it to bias my spread slightly up or down. I unfortunately don't have a very good track record trying to leg into spreads. :(
 
Quote from tuwood:

I agree with what your saying, but I'm sensing that not many of you are using LEAPS on your calendar spreads.
from a calendar call/put perspective how far out do you typically buy your long postion?

I actually do use TA a lot, but I'll admit that I usually use it to bias my spread slightly up or down. I unfortunately don't have a very good track record trying to leg into spreads. :(
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Hi Tuwood...glad you've found us...i don't use leaps at all...finding these 3 or 4 month calendar's is a full plate for me. I certainly understand your hesitation on individual stock issues...event risk is a real consideration.....and think that perhaps calendar's on QQQ's make more sense than say credit spreads on QQQ's. I'm really learning how important volitility is in pricing and following it much more closely since I've been doing the calendars.

I'll be looking forward to seeing how you do adjust/if you adjust your current spreads. Will update mine this weekend. good trading!
 
Quote from tuwood:

[
Here's my current position, feel free to comment.
STO 6 x QQQQ MAR 41 Call
BTO 6 x QQQQ JAN 2007 41 Call


Also, I am fairly stuck on the Index's because I was burnt badly with "event" hits on equity stocks in the past.

Thanks in advance. [/B]
More...

One question I have on a LEAP's calendar on the QQQQ ...do you take in the seasonality of the QQQQ's....at least semi's are thought to be stronger Nov- Mar and week Apr-Oct, that kind of thing? I would think the IV's would take that possibility into consideration. So would you think about doing more of a diagonal in some months selling either a more OTM call or more ITM call vs a straight calendar?
 
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