I'm still too basic, luckily caught the AMC Jan movement on the right (long) side with shares and 1.5 C 2023 leaps (made big bucks, the best trade of my life to date). But this time only with a boatload of 13 and 12.5 short puts. Still polishing more complex structures but still fully focused on SN, no experience with indexes.
What do yall think about calendar or diagonal Spreads on Meme Stocks?
- Thread starter zghorner
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I'm still too basic, luckily caught the AMC Jan movement on the right (long) side with shares and 1.5 C 2023 leaps (made big bucks, the best trade of my life to date). But this time only with a boatload of 13 and 12.5 short puts. Still polishing more complex structures but still fully focused on SN, no experience with indexes.
Sorry for the basic question. But why one would ever sell the near term Call at a lower strike (below B/E) than the long? for specific short duration vol events?
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Not basic at all...You(I) can look at the diag we are discussing as a combination of a calander and short vertical spread..We know the reason we are looking at calanders,despite vol being high..So you are really asking why be short the vertical as well...I traded AMC 2 week diags going short the 20 puts and long the longer dated 19 for a .18 credit..Assuming the 14 day calander traded for .12,I was effectively selling an OTM 20/19 put spread for .30...
IMHO,that was very rich for a 1 point put spread 50% plus percent OTM....
I also look at my max risk to max reward,and am good with the max loss of .82..I believe that if AMC craters to 17 ish,vol will still be jacked and I will be long the synthetic 2 week 20 call,assuming no adjustments
At the end of the day,it comes down to how one feels about the vertical..Hope this helps
IMHO,that was very rich for a 1 point put spread 50% plus percent OTM....
I also look at my max risk to max reward,and am good with the max loss of .82..I believe that if AMC craters to 17 ish,vol will still be jacked and I will be long the synthetic 2 week 20 call,assuming no adjustments
At the end of the day,it comes down to how one feels about the vertical..Hope this helps
Why would you be in for less than 2?
Update: the 18/6 C 22 expired worthless, the 17/12 is worth 2.10. The result is a loss of 1.15. Larger vega for the far-dated had a greater impact and in the last 2 days the premium decay on the weekly was so low that it couldn't compare with the decrease in premium on the far-dated.
I did not sell another weekly yet. Prem is low (0.10) and I hope a little for a bounce up. Should clov bounce up to the 15 area i will. Allthough prem is low, selling over the remaining life can recover the loss significant, even if prem decreases to 0.05.
I think switching the strikes on this combination would have fared better, or perhaps a 19-20 combo instead of a 20-22. Less of a loss if a crush happens. Offcourse the tradeoff is less profit on a rise, but the vega on the far-dated makes it up for.
@zghorner , interesting for you?
I did not sell another weekly yet. Prem is low (0.10) and I hope a little for a bounce up. Should clov bounce up to the 15 area i will. Allthough prem is low, selling over the remaining life can recover the loss significant, even if prem decreases to 0.05.
I think switching the strikes on this combination would have fared better, or perhaps a 19-20 combo instead of a 20-22. Less of a loss if a crush happens. Offcourse the tradeoff is less profit on a rise, but the vega on the far-dated makes it up for.
@zghorner , interesting for you?
yes, thanks for posting
Sorry to respond so late,but I like a bit less initial risk on these type of long crazy high vol..I thought paying 3 was too directional in nature ..2 point width,I generally pay less than 2
On these meme stocks,I dont want to suck wind on a vol crush.
Don't like to hedge insane 6 month vol with 2 week vol...
On these meme stocks,I dont want to suck wind on a vol crush.
Don't like to hedge insane 6 month vol with 2 week vol...
I totally don't mind waiting longer for intelligent people
Understand your point about the distance. I don't understand what you mean with hedging the 6 month vol with the 2 week vol. The way i see it the iv on the short term is that relatively much more than iv on long term, such that 'breaking up' the longer term in the shorter term with constant rolling will yield a positive return in total, most times.