Option Spread Trader, New Beginning

AA halted. And I was going to go cook some dinner too, wtf.

*Maybe that's normal for AA on earnings? Never followed it before, obviously. Gotta go to Publix, brb.
 
Well at least I bought some good drumsticks. AA is open and is at 10.xx right now, when I initiated the position high breakeven was 11.02. I'll update on the loss when I close it out tomorrow, lol :)
 
Quote from Kedwards:

Well if I bought an AA Long Calendar it would have had a bearish bias at the 9 strike, so I did a double diagonal instead:

  • Sold 10 July 10 Calls
  • Sold 10 July 9 Puts
  • Bought 10 August 10 Calls
  • Bought 10 August 9 Puts
  • .76 Debit

Benefits from no movement. Although long calendars have worked on AA in the past, this time, with what I gather is uncertainty for commodity prices, AA may make a substantial move. Earnings after the bell.
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It's not a diagonal. You traded the 9/10 time spreads. Vols will drop a bit, but you'll win on the 10-strike gammas. You're not going to get hurt here.
 
Quote from optioncoach:

Trade what you know.
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Hey coach! I'll put this as a sticky up by my monitor next to the one that says 'Irrational Exuberance". I put that one up when I didn't offset a 10k (real money) profit on Citi, thought it was going higher (lololololololol, so sad the way C pulled back that day).



Quote from atticus:

It's not a diagonal. You traded the 9/10 time spreads. Vols will drop a bit, but you'll win on the 10-strike gammas. You're not going to get hurt here.
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Hey atticus! Yeah it wasn't a diagonal, but when I went to place the order on ToS's options chains I used 'double calendar' which is listed under the double diagonal tab.


Anyhow, on the position I offset for .84 cents, making a .08 cent profit ($100 bucks exactly, papermoney). AA traded lower throughout the day, profit could have been better. At the least, AA fell in line with the backtested results, which said that AA won't move too much on earnings. Granted it was up to 10.20ish I believe after market yesterday so, with a sizeable position, maybe you had a ugly mark to market loss, but if held through the day you made out okay.

I haven't been spending so much time on options the last couple days, I've been trying to get a better understanding of technicals/support & resistance. Outside of event related volatility strategies, options spreads obviously have a directional element, so I'm working on the technicals for that so I'll have better entries and strike selection for spreads in the future. Later!
 
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