My System

[spindr0]

Quote from ramaTrade:

The only reason you have made money in gld so far is because gld has been in an uptrend for almost a year. The calendar spread strategy counts little and just give you a false sense of security. The tiny income you received from selling the near term OTM calls will never be enough to compensate the loss you will incur if the trend starts to turn. It is close to selling DITM puts.

How did buying a diagoanl call spread turn into equivalence with selling deep ITM puts?

 

[cdowis]

It is an ira account. And I trade with TOS.

 

[trefoil]

I asked this precise question of TOS - what was allowed in an IRA/401(k), etc. - a little while ago. Answer reproduced below:

Permitted positions are:

1. Long stock (must be paid for in full with cash)
2. Long calls and puts
3. Short puts with cash equal to the value of the strike price
4. Short calls against long stock
5. Long and short verticals, butterflies, condors, and long calendar spreads
6. Futures are allowed in Traditional, Rollover and Roth IRA accounts however the account holder must have 3 years derivatives trading experience and maintain a minimum $25,000 net liquidating balance.

Prohibited positions are:

1. Short stock (even if it is hedged with options)
2. Naked short call options

Would you ever sell a put without doing a vertical? If not, you should be OK.

 

[cdowis]

Update:

That was a rough ride down. I did not see a bottom of 133. All my shorts are gone and I have 500 deltas in GLD, with room for a few calendars/condors. Not too bad for a account size of $14k.

Let's see if this thing works.

Considering the deep hole, I may do some hedging at the top. My account went down about 10% of my account size.

Whew! That is stupid. Perhaps I should liquidate some of my positions at the "top", or get a couple weekly puts.

 

[traderlux]

cdow, any update on your gld trades?

 

[daveyc]

I was just going to add to this thread. Buying far out deep 'in the money' calls and selling the front month 'out of the money' calls is the cheapest way to go as an 'alternative' to a 'covered call' position. And covered calls has the same risk as selling puts.

I do and have sold puts at times because it is the cheapest way to own a stock but I would like to see the put expire worthless ofcourse.