Did my first earning trade today- JPM Double Calendar.

W

wartrace

I haven't done much options trading only covered calls. I decided I would get some more in-depth options education once I realized selling covered calls was essentially selling naked puts.

I noticed JPM has earnings before the market opens on Friday (10-13) and decided a double calendar spread might be a good way to play it. (maybe not? what do I know)

I sold the 141 13 Oct put and bought the 141 20 Oct put. I sold the 150 13 Oct call and bought the 150 20 Oct call.

This is a debit spread and the max loss is 93 dollars with commission. I am looking to profit from the IV collapse between the near-term option which is currently at around 68% and the longer-term option which is around 33%.

If JPM stays between 136.50 and 155 I will make a profit depending on where in that range it closes on Friday. From my understanding, I want to wait until Friday afternoon to close it out. If it is near either of the strikes my plan is to close out the strike on the losing side and possibly do a vertical spread or butterfly.

I will report the results in this thread on Friday evening. I am still not too comfortable with complex options trading but if my education costs me 93 bucks no big deal.
 
Why do you trade ANYTHING if you "don't know"? Sounds like gambling to me.

wartrace said:
I haven't done much options trading only covered calls. I decided I would get some more in-depth options education once I realized selling covered calls was essentially selling naked puts.

I noticed JPM has earnings before the market opens on Friday (10-13) and decided a double calendar spread might be a good way to play it. (maybe not? what do I know)

I sold the 141 13 Oct put and bought the 141 20 Oct put. I sold the 150 13 Oct call and bought the 150 20 Oct call.

This is a debit spread and the max loss is 93 dollars with commission. I am looking to profit from the IV collapse between the near-term option which is currently at around 68% and the longer-term option which is around 33%.

If JPM stays between 136.50 and 155 I will make a profit depending on where in that range it closes on Friday. From my understanding, I want to wait until Friday afternoon to close it out. If it is near either of the strikes my plan is to close out the strike on the losing side and possibly do a vertical spread or butterfly.

I will report the results in this thread on Friday evening. I am still not too comfortable with complex options trading but if my education costs me 93 bucks no big deal.
More...
 
M.W. said:
Why do you trade ANYTHING if you "don't know"? Sounds like gambling to me.
More...
I know a little bit after doing some studying. I have a list of criteria for the double calendar that JPM meets this earning season. Saying "I don't know" is sort of a humble way of saying it's my first time. Sort of like that time I was 15 with Suzy rottencrotch and wasn't 100% SURE I knew what I was doing but went ahead anyway. :D
 
That's how unwanted babies are made. Same stupid behavior than what you described. Don't throw money at something you don't yet have the slightest clue about, is my advice. Take it or leave it.

wartrace said:
I know a little bit after doing some studying. I have a list of criteria for the double calendar that JPM meets this earning season. Saying "I don't know" is sort of a humble way of saying it's my first time. Sort of like that time I was 15 with Suzy rottencrotch and wasn't 100% SURE I knew what I was doing but went ahead anyway. :D
More...
 
M.W. said:
That's how unwanted babies are made. Same stupid behavior than what you described. Don't throw money at something you don't yet have the slightest clue about, is my advice. Take it or leave it.
More...
I appreciate the advice.
 
Its easier to learn trading with one lots instead of a sim account for an extended period of time. Also just learning theory for years and never really trading is pointless. But you definitely need to calculate your forward vol to see if your starting with any edge in the calendar.
 
That was interesting. Huge beat on revenue and earnings. I probably lost on this trade but will wait til this afternoon to reevaluate. I did close out the put calendar for a small loss (30 dollars).
 
I found that on earnings IV changes also further out on the term structure, so the payoff chart you see on these calendar/diagonal is kind of relative.
 
I just closed it out for a 44-dollar profit. It was a pretty good learning experience. One of the errors I made was closing out the put side too early; I could have made an additional 10 dollars had I waited. I will continue to educate myself on earnings trades and hopefully, I will get better at them.
 
Last edited:
You must log in or register to reply here.
Back
Top