Ok all, another way of trading options. It was mentioned a while back by someone?
Calendar call spreads. I have done some for awhile and I will pass on the results. It is a little more complicated than straight naked puts and pretty much the same as our normal spreads.
These are not an 'end all', but in an up market they work pretty well. I hesitate to add another layer to what started as a simple (and still viable) naked puts blog, but I promised to share my trading styles.
Here is an example of recent trades I have made.
These are using the Jan 2012 options as the first part, and the current options (this weeks or next weeks.) So here goes all, I hope I don’t confuse and discourage new and old traders.
When doing these it is important to know what the ‘time’ value is. These are not for a trader that checks their positions at night. You should be on top of these as conditions change and never forget.. I believe in taking profits
Here is how they work for you, and then I will get in to a few examples.
These are for bullish thoughts. You can also do them for neutral or bearish feelings. You sell a near term option. And buy a ‘way out’ option. Most of the options books will tell you that it is usually done with the same strike. I do that sometimes but more often, I use different strikes. I am using the Jan strike and that is the lower strike..
I open by buying the Jan. 2012 at a near strike
I sell the July 16 at one strike above the strike I am using in Jan 2012
The best situation is when the stock you are using has a lot of time value in the near term options. For example the July 16 GOOG 545 sells for 15+ With GOOG trading at 546 there is easy to see that you have around 14 of time value in a one week option…wow.
So the trade
GOOG is trading at 546.60
I bought the Jan 2012 555 strike. Cost is 38.10
I sold the July 16, 560 strike for 8.60
Net debit is 29.5 or 2950 per options
Ok the plan is with GOOG trading at 546, the July 16, 560 strike is trading at 8.60. The stock has to go up within a week over the 560 (12.40) or it will expire worthless. And even if it goes up, the Jan 2012 will be in the money and will track along pretty close. So they both go up.
My bet is that it will not go above the 560 but I do not really care as stated, the one I bought will also go up and I get to sell it when closing.
An example; GOOG goes up 20 points to 566 next week. At closing the July 560 will be now ‘in the money’ 6 points and for me to buy it back it might cost 6.50 I sold it for 8.60 so I make roughly 2 dollars on that side but….
I now get to sell my Jan 555 and it will track along and might sell for around 14 more than I bought it for. So maybe 43.5
The profit picture looks like this.
Make 2 points on the July options and make 14 on the Jan option.
For 16 total. The set up cost me 29.10 but I will close the spread for around 45 for a net overall of 16 points. I invested 29.5 made 16 net =54% in a week. 16/29.5 =54%) Now that would be for a big run up in the stock
For a stock that does not move at all the results might be like this.
Bought the 1/2012 555 strike for 38.10
Sold the July 7, 2011 260 strike for 8.60
Net cost to open is 29.50
The stock does not move a bit
In a week the Jan option will trade about the same but the ‘time’ will leak out of the near term option and it will expire worthless. So you sell the Jan option for about 37 and don’t forget your net out of pocket was 29.5 so you make around 7.50. If the option ends any where below the 560 strike you will keep the premium of the sold July option.
Now for the downside.
If the stock falls much, the July option will expire but the long Jan option will drop and if it drops more than around 7 then you lose on it. But next week you can sell another near term option for the next week etc. it is basically a covered call on an option.
I have done many and some with AAPL and all others with GOOG as it has so much time value figured in. I also have some with the Jan 560 and the July 560 also the jan 550 and the July 555. So there are many ways to do these. The main point is that you are betting on the time leaking out. You must be prepared that the stock can drop and like owning a stock, your position can lose money. But for a stock like GOOG, trading around 546, it is like buying it for 29.5 in the above example. You can sell the near term call each week and hope that the stock comes back. BUT, IT MAY NOT… So be aware of the different ways the move can go against you.
Also it should be noted that you do not let these expire if any or both are in the money. . You are to close them before expiration. If the near term goes into the money and you are assigned, you will have to go through the hoops of assigning yours and the related hoops.
If neither is in the money let them expire and sell again next week.. etc etc. It is also advised to not 'leg' in or out of these positions. If the stock turns, a winning play can become a loser...
Also be advised that the time value is bigger as options are getting near earnins. Earnings = potential up or down...
This is just a quick over-view and I’m sure most get the idea. So if you don’t understand read up on them and the risk involved before jumping in.
Sorry for the long post but the profits for me have been quite big and I wanted to share this style with those interested. If any of you traders want to discuss these and the high POTENTIAL PROFITS, drop me a line at putman3232@ yahoo.com
123 comments:
Totally off topic, but I have finally found where the discussion has gone. I posted on TK a little bit a while back.
I hope you are well Jerry!
Thanks so much Jerry for sharing your life trades. I like the book Bible of Option Strategies by Guy Cohen which sums up most option strategies.
Something unrelated here:
Did anybody watch Dexter series? One of the websites gave me a good laugh.
Dexter: "Casey Anthony is not guilty? Let's see about it."
@Jerry, Thanks! I always wanted to know this calendar spread. by the way, what is the risk management of this option play? when do you exit the positions?
Jerry,
Thanks for adding this arrow to the quiver... though the uptrend just got kicked in the teeth.
Am I understanding correctly that you are closing out both sides each week? Or.. do you keep the long call if the short one does not move and keep selling new ones against it?
Thanks,
George
Well the mkt looks down today relating to the jobs report. These expected reports are a good reason to leave lots of cushion and not totally commit to any one style of options. We still have the congress and the budget problems ahead of us and Europe is also still having some troubles. Keep your powder dry and don't try to force a trade that isn't safe.
Jerry
I wanted to test the calendar spread, and opened 1 contract this morning.
BTO Jan 2012 560 Call
STO Jul 2011 550 Call
This is a GOOG spread right? Doesn't matter but shouldn't the sell side strike be higher than the buy side? Your collected premium will be higher but the sold call will be at greater risk, even if the stock rockets high enough to affect the bought call.
Charlie, I put it in wrong order. will close and open again. Thanks!
Question for naked put sellers: I am relatively young and thinking about leaving a relatively good paying gig to go full time with my put selling strategy. I'm wondering if anyone has taken this plunge and had success. i.e. over 200k in annual earnings consistently. I've been able to make 5%ish a month, but would like to here about peoples' experiences over a longer time-frame. thanks
DJH,
I'm a new convert to selling options. I got in the U.S. stock market for the dividends at first, and then covered calls, which I still do but only when it's DITM. As I learned, by reading this blog and Jerry's book, CUSHION is more important to me now than assigned returns or monthly, annual returns, etc. My goal is 2% a month for selling a portfolio of put options from underlying stocks with strong valuation with a few weeks till expiration. I also opened another account to do only the weekly spreads and IC. From that acct i will shoot for the 1 % a week as it seems to be the standard around here. You could say I sell
options full time now and I intend to be like Jerry and the others in this blog doing this for life. I love this "job." Even though some risk management is necessary, time decay seems to work effectively on the bottom line.
Paul G.
Jerry,
why are you selling out of the calendar spread instead of rolling into another expiration? This is what I do on my diagonals. You might do that, but I don't think I read that in the post.
Chris
HI all, Well the GOOG train came to a halt today but still is ok.
1. The calendar spread has so much time value that they should all end ok. EX; Goog is now trading around 532 the 550 strike for this coming week is selling for 7. So 18 points out of the money and still $7 in premium. For a great naked call, is the 560 (28 pts out of the money) its selling for 4+ For a naked put play, look at the 475 put. It sells for around .80 That is over 1% for the coming week unless goog really turns around.
Kiteman, if the calendar long part is in the money, i will just sell another call for the next week. As mentioned, it is like a covered call on an option. Now if the spread was for maybe the 540 now and 540 later and the stock went to 539 or any where close to the strikes call i would probably close both and open a new position next week. I might roll out if all other things are looking correct. Often I find that the best or most profitable plays come near earning (volatility) time. So sometimes it is best to drop this strategy until all is right again?
This is just one more arrow in the quiver. I am not advocating these or spreads etc. Just now and then an opportunity comes along that is interesting. I will probably do some of the GOOG 475 naked puts Monday. Many ways to skin an option.
DHJ, Options can be a risky position to put all of your nest egg into. If you do it like a business and keep on top of it you will get good at it and make a good living. 1% a week is not outrageous, but think .5+ and you will be safer. It becomes tempting to try more risky strikes in any style of options as your success moves along. Fight the temptation!! It will bite you on the butt... Just plod along and make a good living avoid the "I'll try this one risky play this month as the stars are all lined up etc" That is the one that bites you.. If you make 1/2% a week that is around 28% ann. then taxes etc.. Can you live with that.. If so then go for it. Just don’t trade one chained desk for another..lol.
Jerry
You may recall me mentioning that I've read your book 3x. I did not follow every rule last week. No need to rehash.
However, for the life of me I cannot find any advantage for going naked vs spreads. It requires SO much margin it does not make up for the savings of not buying the long option. What am I missing???
Many thanks
Rick
In the particular case Jerry mentions, ie. GOOG 475 PUT @ 0.80, if you trade the 475/470 vertical for 0.15 you can almost double your premium on the same maintenance. I sometimes find it more complicated to exit a spread, however, and sometimes it's more expensive if you don't have time to work it.
So choosing a vertical vs a put is a decision with several variables. But to make the decision I first look at the premium given the same maintenance.
If, on Monday, this particular spread throws off 3% I'll be interested to hear whether and why Jerry executes on it.
I would be interested to hear that as well. My take on makers are that they can be safer in the sense that I can go much further out and generate money, but the ROI gets very low then of course.
Hi all, Nic and others, don't worry to much about the ROI, just be sure to get some. You do probably get ROI for a spread than naked puts as the maint is lower. But you must be aware that it temps you more than naked puts do. One miss-step and it can bite you. Also it is harder to close and bail on a spread than plain puts? But all is manageable if you are aware of the pitfalls and potential problems.
Jerry
On Friday I put in two orders for this weeks weeklies: SPX 1250/1245 for .05 and for .1 and the .1 got filled but not the .05?! Hey, I'm not complaining!
I put an order for 1205/1200 for .05 this morning. It just went through. SPX is liquid today!
I might just wait this one out. Blood red now. I am going to be patient. Not forcing anything.
I'm watching NFLX, AAPL, PCLN among others.
Should have good premiums tom. or Wed as well.
RK
Hi Jerry, I don't understand why is it harder to close a spread than naked put? Can't we just close the short leg? It is the same as closing naked put then. I must be missing something.. Please help me to understand. Thanks.
Ying
HI Ying, I guess it mechanically it is just a matter of a few more buttons to click on but the harder part is deciding,
Do I keep the long, and hope it makes me money?
Do I close as a spread?
Do I leg in or out?
It is getting closer to the short strike, but I do have the long as partial safety, do I just hold on and hope.
So Ying, I guess that is more of what I meant by harder. Of course not insurmountable reasons but real ones. With a single put, it is just do I want out or not.
Today I sold the GOOG 475 puts. It is an earnings week, so not done without a lot of thought. I have 55 pts of cushion and I like that but it is a spooky market. This is certainly not for all. Just what I did. These are naked and if I decide to, I can leg into a spread to reduce the maint.
Hi Jerry thought as much as you started the off topic thread most things I do is OT and the blog is getting so long I just keep my trap shut. Now I can share one I did back on 6-17.. My main focus is on weekly’s so when RIMM tanked on the 17th I stepped in and bought Jan. 2013 25 Calls @7.90 I have been able to sell OTM weekly calls for over .33 a week this week short July 30 calls at .41 Let’s see If I can Av. .35 a week all the way to 2013 that’s ahhhh A Boat load.
As a hedge I also bought ¾ of my position size in Oct 23 puts 1.25
If they pull the weeklies from RIMM I’m gone.
@All, I picked up the SPX put spread today.
1240 / 1235 For .10 premium.
SPX is down 22 pts today. It will have to drop another almost 60 points before I get worried that would be a total of 80 points before I start to worry.
I feel confident in this trade.
@avid_kris, i wish i could do those trades but .05 only makes me like $10 lol cause of my comms. i hope to be there soon with you as it is much much safer and i like that.
@Fulgore - I tried various similar trades for last week's weekly and I never got a fill on any of them. So my funds didn't earn any money. This is one of the main downsides of doing far OTM trades. I was fortunate to have this trade go through today. When market volatility is high, it is more easier to make these kind of trades. When market was up last week it was almost impossible unless you got to closer strikes!
You may want to check IB for better commission. I believe they operate in Canada and may be better than TOS for you.
IB is better BUT with my main i use i don't have enough yet, i will have to wait until i build up more capital before i switch with them.
Ok Jerry, I joined you on the GOOG puts...only at a lower strike. I sold the GOOG 450 puts @ (.25). I will BTC them @ .05 if they drop to that price before close on Friday, otherwise, I will hold them into Friday's close (and their subsequent earnings report) and play the WOF on those 450 puts.
I'm now seeing that GOOG's earnings are on the 14th (it was, at one time, reported as the 15th—or so I thought). Is anyone else seeing GOOG earnings as the 14th?
Earningswhispers.com show Goog at the 14th after close confirmed.
OK, thanks Ed.
Well, that just shows how non-liquid Optionshouse seems to be. I had the same spread as Fulgore, 1240/1235 asking for .10, the whole day without getting filled.
@Nic :( sorry, i had it in, in the morning around 10 or 11 am.
Hey, I'm certainly happy for you! I'm just a bit suspicious regarding Optionhouse.
To me, a major disadvantage of selling spreads vs. selling naked puts is the the double bid/ask cost of getting into the trade & then potentially getting out of a trade. Especially irritating to me is seeing that after some time in the trade I made money on the sell portion of a vertical ... but the buy side went down by a similar amount and therefore my net premium is about the same. If it was a naked sell only, it would be profitable, but a spread doesn't really make you money unless you let it expire. Especially if you're playing with these .05 premiums ... you really can't exit these trades profitably unless they expire at zero.
My advice is to get LOTS of cushion with a few weeks out by following Jerry's original strategy. Get 3-4% ROI by selling a naked put a few weeks before expiration that's 20% OTM. Or 6-7% ROI on a position 6-7 weeks weeks away. Yes, there's more time for things to go bad, BUT it does give you time to react. With SPX weeklies, you have no time to consider options to recover. The rising SPX two weeks ago that caused call sellers such problems could be avoided by MORE cushion and MORE time.
Just my opinion ...
Jim, I think you're hitting some very valid points. I started out selling puts but switched to spreads and weeklies, and quickly realized that the time decay that made puts so attractive doesn't really exist with crumb spreads, they have to expire. However, I still find the ROI potential better on my total fund with spreads, given the lower maintenance, and I don't have to worry about the maintenance increasing if my cushion shrinks.
Still looking for the magic formula...
Hi all, some good points for naked puts and spreads. I will say in defense of spreads. I only do them with weeklies. As noted you nearly always have to let them expire to get the full benefit, but weeklies solve that problem.
Regarding the magic formula... lol.
The closest I have found to that is lots of cushion and smaller returns.
As I have said before, the 'big boys' with rooms full of computers can't beat 1 % a month. So when we talk of 1% a week we are making about 4 times what they do. Also of course, that is a heads up to .. are we off base.. Probably a little of both. Being small fry does give us some flexibility that the big boys miss. You can imagine if you had 500 million to find a home for each week.. yikes, the overhead would kill them and really overwhelm the markets. So our 10 -50 options just settle in nicely without disturbing the balance to much.
I am really enjoying the diversity of our group. None are wrong as there are many ways to do these. We all learn and are exposed to different ways and we can evaluate on our own time and learn and either use or discard. But sharing our ideas is what I started this blog for. We have had over 95,000. hits and not a single sour puss.. thank you
Jerry
Jerry,
Thank you for the blog,
The strategies do seem to be getting refined.
Seems like selling naked calls with standing orders to buy .25 below the strike is coming into season.
Jerry - re: the big boys, we do have an advantage here. We're trading 30, 40, 50 options and basically competing among ourselves. The large houses blow that kind of money off the table when they sneeze. But it's there for us because there are so few of those OTM options available.
It's because of Open Interest. Can you imagine, in the large house scenario, having to exit a position consisting of 4,000 OTM puts on, say, VECO? Woof.
Hampton, so you're saying we can't do this after we've reached a million or two?? :-)
I cannot wait to have that problem!!
===================
Re Naked Puts - to sell 10 450 PCLN Puts (@ .10) I collect $100 divided by ~43,000 maintenance = 0.23% ROI.
Maint calculated from TradeMonster paper account.
Is the maintenance calc incorrect?
If not, I ask again, how can it be justified?
I REALLY want to understand.
Thanks!!
rick
btw - that is a Jul option expiring this Friday. To collect the same .10 ($100) with same cushion, you have to go to a $10 spread. ie a 440/450 put with $10,000 maintenance = 1%.
I'm just lost on the skinny dippers :-)
HI all, some great points above..
I just closed my goog puts (475’s) Took some profits to avoid the earns.
Also closed a bunch of the calendar spreads all at a profit in goog. I did open 25 calendar spd's on AAPL
I sold the July 16, 355 for 2.95 and bought the Jan /2012 355 strike for 29.7
So a 10% profit and earns next week. If aapl moves over 355 by Friday i will close before the close on Friday. If it does not move above 355 I will sell the next weeks again.
Be careful with earns coming in tech stuff. It is ok to trade them but be aware and figure in the potential bad news.
Hey Bald, the naked margin is calculated as the higher of:
i) 20% of current price (527) less the amount OTM 77 (527-450) + premium rec'd = 13.1 x 100 x 10 = $28,500.
ii) 10% of strike (450)less premium rec'd = 44.9 x 100 x 10 = $44,900.
So, $44,900 is close to your 43K, not sure what else TM includes in it's calcualtion. The margin calc comes from Jerry's book.
@Jerry,
When you sell calendar spread, are you selling a position in the money?
I see your sold AAPL July 16, 355 is in the money now.
I closed my Google calendar spread with about 7% profit.
Hey Jerry,
Just wanted to be ultra clear on the strategy for these calendar spreads;
You close the *entire* position out on Friday if aapl has gone above 355 or just the sold part of it?
Also if not above 355, you just let the sold part expire and then re-sell them when? The following monday or so?
Jerry, a couple things here. First, and this is not a "biggie", but what is commonly referred to in this blog as a "calendar spread" (buying a longer-dated option at a certain strike and selling a shorter-dated option against it at a different strike) is more commonly referred to (outside this blog) as a "diagonal spread". A calendar spread (AKA horizontal or time spread) is where you are also buying a longer-dated option and selling a shorter-dated option against it, but doing so using the same strike price for both options (the long and the short). The calendar spread uses different expirations and same strike prices for the option spread and a diagonal spread uses different expirations and different strike prices for the option spread. So, outside this blog, what you refer to as a calendar spread, is called a diagonal spread (by most). You can call it anything you want and as long as you are consistent there will be no mis-understanding as to what trading strategy you are referring to, but I just wanted to point out that subtle difference.
Second thing, can't blame anyone for exiting a trade for a profit, especially for the reason you stated. I'm staying with my 450 shorts (at least for now). Trading GOOG over earnings is nothing to be taken lightly. There are a few things I'm going to be watching leading up to Thursday's earnings report:
1. "Doctor J" seems to always be playing GOOG on earnings and I will be looking to see if I can get a cue from him as to whether he is long or short going into earnings. He seems to always be on the right side of the trade...I hate that, but I respect it.
2. Will be watching CNBC on Thursday to see if they interview Mark Mahaney about the GOOG earnings report as they have in the past. He is an analyst from Citi who has been "spot-on" on GOOG. "This guy is good".
3. On Thursday, I'll be watching the put-call ratio in the GOOG options. If it's heavily skewed to the put side (institutional money), I may exit my position.
4. If GOOG has a good "run-up" into earnings, I think it will probably sell-off on the earnings no matter what they report. But, if it runs up to say 550, I will probably stay in my position as I don't see GOOG dropping 100 points on earnings...possible, yes, but unlikely.
Hi Jerry, for the calendar spread, what is your stop loss if the stock is heading south?
@Dave,
A quick question to u.
How do you get this "put-call ratio" ? Thanks
HI all, Dave G. you are correct regarding the exact name. They are the same except for if you use the same strike or diff ones.??
About half of mine use the same strike and some not so.
Traderich. When you open one of these, you will end up with a debit. EX; I buy the apple 2012, 355 strike for 29.7 and I sell the July 16 355 for 2.95 for a net debit of 26.75
Ideal result is that the stock ends at 354.90 – Then the sold one expires and you do it again. The appl that I sold this morn is now in the money but it doesn’t effect me much as the time value will go back to near par Friday afternoon as the time value leaks out.
So what I watch is the debit of 26.75 This should turn into my favor as the time leaks out.
If the stock took off then the sold will be near par and the Jan one will go up close to the same. The idea is to have a credit at closing. But as asked, if the sold one (like my aapl) is in the money, right before expiration close all, both sides. That is the recommended thing to do.
If the stock really dropped then all time would leak out of the sold and some out of the Jan . I could close or sell again the next weeks.
I just did more of the AAPL but jumped to the 360 strike both sold and bought (a real calendar spread..lol)
Sold the 360 for 1.93
Bought the Jan 360 for 29.4 for a debit of 27.47
Many ways to skin an option. AAPL reports next week. Be careful.
Kenny it is not advised to open this spread ITM. If it goes into that is ok but generally not recommended to open that way
Jerry
Kenny, I get the put-call ratio information from my broker. What it represents is the number of put contracts traded that day (represented by "Volume") divided by the number of call contracts traded that day (also represented by "Volume" but for calls instead of puts). Now, this ratio is very "rough stuff" information and must be treated as such. What you can't discern from this ratio (unless you subscribe to a pay service like optionMonster) is the following:
1. You don't know from the number of option contracts traded that day (the volume) what percentage were people buying options and what percentage were people selling options. So, for example, if 100,000 contracts were traded on the put side for a particular day, if 90% of those were BTO vs. 10% STO or 10% BTO vs. 90% STO, that would be important information to know.
2. You don't know what percentage of contracts were being bought on the offer and sold on the bid. If a large number of option contracts are being bought on the offer and sold on the bid (in other words, they are not trying to negotiate the spread), then this is indicative of a strong desire to just "get into the trade" and represents a much stronger conviction in the stock moving in the desired direction. I also think it probably represents more institutional trading than retail trading...not sure on that one, but Doctor J seems to focus a lot on this one and I think that is why. He always wants to be trading with the institutions.
3. You probably do not know (unless you are watching the put-call volume throughout the day) in what size increments (chunks) the put and call volumes are increasing by throughout the day. Is the volume increasing in chunks of 1,000 or 10,000 (institutional trading activity) as opposed to chunks of 1 or 10 (retail trading)? The "smart money" is to be trading alongside the institutional money.
4. You don't know people's sentiment behind the trade. For example, someone buying puts as insurance because they own the stock and are overall bullish on its future price movement (but just want protection for the earnings report) has an entirely different sentiment than someone buying puts because they think the stock is going down.
Doctor J, with that patented software that he and his brother developed, has the information described by #1, #2, and #3 (and he can probably discern #4 from the information from the others) available to him with which to make his trading decisions (I think that plays a large part in why he's so successful). It's also why I want to be trading in the same direction that he is (I also think he has many valuable contacts to "milk" information from...he always seems to be well informed on whatever he's talking about). With all that being said, I still use the put-call ratio information that I get from my broker, but fully understanding its limitations as stated above. For example, on Thursday, if the GOOG put-call ratio was like 10-to-1 (10 puts to every 1 call), I would be more inclined to exit my short put position before the close of market if there were no other compelling reasons to stay in the trade. I don't use it to stand all by itself as a "go-no-go" indicator, but rather just as another piece of information to be considered when making trading decisions.
@Jerry,
Since AAPL is American, any chance it is assigned prior to the expiration day if the sold one is ITM or becomes far ITM?
@Dave, Thanks for the tip!
@Nic - I'll have to get back to you on that. ;~)
I've been studying the calendar/diagonal spread, and wonder if anyone can explain to me why there is such a massive difference between AAPL and GOOG in the short term call premium?
For example, 15 points above strike on GOOG is at $7 but the same at AAPL only at .15? Is GOOG so much more volatile?
Another question on the topic of calendar spreads. OH shows this trade as requiring no maintenance? (Could be since it was after hours and I never executed it)
Kenny, Yes there is always a chance but seldom done. The reason is that there is always, until right at expiration, more money in the option than the stock. But it could happen. Generally it would be a plus for you and a minus for that traders. I talk about this and give examples in 'the' book. Notice the emphasis on THE.. LOL.
If all things are right in the world, these diagonal or calendar spreads can be a real money maker percentage wise. But as with all options or stocks for that matter, things can and do turn against you. As I mentioned earlier, these are a lot like covered calls. The good is that you can play a stock like AAPL that trades around 355 for the 28 or so debit. So you get the full advantage of higher option premiums for a fraction of the cost. For more conservative players there are stocks like IBM or CAT etc that can and do give 5 to 10 % per week
My reason for opening the AAPL and closing the GOOG is that I made some money with the goog’s, but mainly AAPL has a lower PE and better overall recommendations from analyst. Also I was in an AAPL store yesterday looking at the new I-phone and the store was packed. AAPL has given no warnings, so even though they always downplay the next quarter, they always do well.
Goog on the other hand is a little shaky regarding earnings. It should be great, but???
Goog can drop 20 points on earnings that do not meet expectations. AAPL should meet or exceed. Also AA
PL reports next week. That will give a chance to know hwat happened to GOOg and then get back into it if all is right in the world.
This goofy budget stuff and Europe etc is a wild card hanging out there.
Jerry
Jerry, they don't seem to compare premium wise though, like I mentioned above, 15 points above strike on GOOG is at $7 but the same at AAPL only at .15?
@Nic,
That's because I believe due to the IV(implied volatility). GOOG's earning report is 2 days away, that makes huge premium difference.
Yes Kenny, I agree, IV rules for premium. It also shows you of danger that the stock could go either direction. a blessing and a curse..
Nic, also to your question of maintenance. There is no maintenance for calendar spreads. The cost is, as I mentioned above, if you buy it for a debit of 27 or so, then that is the cost. the 27 would be deducted from your account just as if you had bought stock for 27. If you did one that had a debit of 27 and you had an account of 100K you could do 37 of them. 100,000 / 27= 37. If they paid 5 (not unreasonable at the first of the week) you would have 3700 x 5 = 18,500. or an 18.5% ROI for the week. Or over 962% ann. returns...lol.
Remember that premiums are high this week and next as IV is high around earnings time.
PUT / CALL RATIO
As stated TradeMonster (from OptionMonster) has some cool tools for this. I have an unfunded TM account I use for this info. After 90 days, the real-time data is delayed 15min, which is not too critical for what we do. I'm considering sending them $2500 and make a few trades, and then withdraw all but $100. Their fees are between TOS and OH/TK.
The Najarian Brothers are very option oriented, thus the name of their firm, OptionMonster.
rick
I have following positions at the moment.(all weeklys)
SPX Put 1265/1270 @.15
GOOG Put 465/470 @.10
I may ride out the GOOG earning since I have almost 70 pts cushion.
Anyone holding GOOG?
July 13, 2011 7:40 AM
Chelski,
Your margin calc makes my point. At a margin of $44,900, and to receive 1% ROI, you must sell at $4.49 per contract!!!!
rick
Jerry, lol..we've gone from crumbs of .5%, 1% or even 2% a week to talking about 10%-50% ROI in a week!
I understand Calendar and Diagonal spreads used here are used in certain situations where you bet on an individual stock's directional move within a week and used at certain times like approaching earnings or even more riskier through earnings.
Bald,
That's my understanding too. That's one disadvantage of a naked versus a spread.
My SPX 1240/1235 is holding well and im happy with my 1.2% ROI after comm for now. might look to open up the call side if the cushion is there, but i don't like that it is an AM settle on friday and i can't get out of the trade so i may not take it unless the cushion is at leaste 35+ points.
Rick,
What little I've seen of TM, I liked. I already run two brokerage platforms on my machine...TradeStation and TOS. I really don't need a third one, but I would like to check out TM as some of what I've seen looked pretty cool. What kinds of information do you have to provide to open up an unfunded account? I assume you have to give name and address, but what about SSN, emergency contact etc.? Can you open up an account online without calling anyone on the phone? Is access to TM done through a web-based browser or is it a separate application that you run on your machine like TOS? Come on Rick, "spill-the-beans" on TM. Even though I'm a "skinny dipper" (that's a good one Rick--I like that descriptive name) and not a spread trader (yet), spread traders and "skinny dippers" can still get along and share information...we can co-exist on this blog...right dude?
Kenny,
I was "skinny dipping" at the 450's in GOOG. I entered the trade on Monday @ .25 and covered those today @ .05. I couldn't see staying in the trade (over earnings) just to make that last nickel even though I don't think GOOG is going to drop that far, even on an earnings miss...so I closed them out today. Good luck on your trade...it's always interesting to watch GOOG on earnings.
Mr. G,
You can open a TM account online with the usual info, including SSN. No calling required. Two accounts are open immediately, one is a paper trading account.
Re Skinny Dippers - I have HUGE respect for you crazy fools. LOL. But if I used $50,000 to earn $50/wk, I would not "sleep well" as we discuss here. Respect does not = understanding. I just don't understand WHY you guys do it. I do agree with recent explanations that spreads almost always have to go to expiration for best ROI. btw - TM is an online platform.
RE TOS - I have (another) unfunded account there. I've tried using their paper account, the learning curve is steep compared to Etrade, OptionHouse, etc.. I cannot see how to do the most simple tasks on TOS. But I'd like to.
btw - what was your margin required for the .20 GOOG profit? $50K?? or .0004 ROI. LOL!!!
I love you skinny dippers.
rick
Hey Rick,
No dispute of much higher ROI if you can get $100 out of $5000 spread. If you take a good look at the volumes and how the spread moves at the trade grits, Bid/ask size is very small of less than 10 mostly at most strikes. There is why if you put 50 or 100 or more contracts, they just sit there whole day. (Even you see $0.15 or 0.20 that went through but not your 0.10). Didn't Nic say the same thing? Just my observation.
If not trading naked put(Newportva always did a good job always) but spx spread, I got 5 cents most of the times. I prefer to put in $10-50 spread for less comm and thus I leave even more cushion for that reason. Yesterday I put in 1225/1235(checking the strikes that have traded over 300-500 contracts a dozen times), the order sat there for a good half day but all went through at the last 10 sec when spx turned red, for a mere 10 cents. Comparing 0.10 with $880 for VMW for 10 days and 0.10 for $1000 spx for 3 days, you proved the point.If I got 0.20 for vmw, the argument will have to reverse. A lot of times is just taking the crumbs without vacuuming every single atom from the table....
Yea right Rick...you say you love skinny dippers...as you're talking out of the side of your mouth. I don't care what you think about us "crazy fools". I'm in and out of most of my skinny dipping trades in two days. I skinny dip at strikes that provide me plenty of cushion (and nothing, nothing trumps cushion), strikes that I feel will allow me to exit the trade in two days or less, and strikes that I have no stress at all in holding a position in. Since I started trading this way, I have had no stress what-so-ever in any of my trades. I'm really loving this SFT (Stress-Free Trading) and for now, this is my trading strategy of choice (skinny dipping) even though I'm a "crazy fool" for doing it. Yes, I will eventually do some spread trading. I'll have to sacrifice A LOT of cushion to do them, but the ROI argument is very compelling. Look what "mess" spread trading got you into. You can say well I was just too greedy or I was distracted by this TV program...whatever, if you had more cushion in those trades, you would have minimized your losses or even had no loss at all and that is what skinny dipping allows me to do...trade with plenty of cushion. But hey, I'm just a "crazy fool skinny dipper", so please forgive my stupidity and ignorance for "not seeing the light" and trading spreads instead of skinny dipping.
BTW, my margin on the GOOG trade was 4,525/contract. So, 20/4525 = .44% ROI for two days. I know, it sucks, but as you so eloquently stated, I'm just a "crazy fool", so I don't know any better.
P.S. I love the "skinny dipper" and the "crazy fool" references. Now I got a name for what I do and a reason for why I do it. Thank you Rick.
@All,
Anyone has ever traded "VXX"? This is a kind of vehicle to buy/sell "VIX" I'm looking at this these days to see if I can find any edge to make some profit. Right now,I'm thinking to start with covered call since it's around 52week low now.
Any thought?
Looking for a broker that quotes spreads with a single bid/ask instead of this constant game of trying to guess each leg individually.Very frustrating to have 5 unexecuted trades, yet if I place them at the market to ensure the execution, me gettum scalped! Need heepum helpum
Charlie
TradeMonster tradeking and optionhouse all offer spread, diagonal, b-flys and condor pricing. I'm sure other brokers do as well I just haven't used them.
Mr. G
You took offense when I meant none. If reminding me of my errors helps you then stab away, but there's no blood left.
I told you I had great respect for your GIGO method, and you (personally) as well just last week.
Jerry always says there's plenty of ways to skin an option.
I went from 400,000 to 40,000 in an afternoon. Spreads had nothing to do with it. Lack of focus and bedridden with neck pain is no excuse. Could you admit to such a blunder? Had I been skinny dipping I might owe the broker $500,000!!!
Step back
Rick
Bald et al,
For any trader, the ONLY reason we incur BIG losses is that we don't stick to our rules (and need a plan to get out before we even entered the trade) and anytime we let EMOTION into the equation is a recipe for disaster.
Rick,
Actually I did enjoy your little debate on naked put and spread here. You got me thinking harder than ever. How many among us can really say we didn't violate our own rules or the rules that were preached to us over and over? Most mistakes I made or am going to make are nothing new.
So Rick you can bring it on - someday when IV spikes, I'll show you a good naked put trade that is worth taking. Go for $40-80 strikes which I think are of optimum level.
Not trying to to preachy (you can tell me off): Refuse to let the monetary loss be a real loss. Let it be your motivation in long run.
I don't lose sleep over my trades, I lose sleep not having my trades filled! LOL
Kind of concern about tomorrow's market after Moody's announcement this afternoon. hopefully tanking not so much..
Rick,
Thanks for being open with us about your experience.
I think the real difference between spreads and naked puts is RISK. I'm more of a risk averse trader. Most of the puts I sell have a 92-97% probablity of expiring. Where as on a credit spread the prob moves up to about 75-80% so tripling the chance of the put spread expring in the money vs naked puts. For call spreads the probablity is even lower.
I won't even touch weeklies because once again the risk goes up dramatically and for IC's forget about it.
Yes the return on monthly puts are probably lower 2-3% per month vs 4-5% on spreads and IC but you have a lot less cushion and more risk.
On top of that you have to sell 3x as many contracts to get a decent credit with a spread plus a lot closer to the money.
Brad
Rick, Hannah, et all. One thing that has always puzzled me, but I never really got any response when bringing it up, is the liquidity in the option market. I read somewhere that a typical Friday, AAPL trades about 70,000 options and with our relatively small board here, we might trade 700 of these, which would mean we represent about a percent of the whole market??? Like Hannah said, maybe my problem isn't Optionshouse, maybe there just isn't that many options for sale. I seldom find what I would consider safe trades for more than .05, even when I've entered on the Thursday the week before. I'm amazed Fulgore is managing to find trades with the cushion he wants even a day or two before expiry.
Rick, since your trading amounts are out of the box, if you wouldn't mind sharing, I would be curious as to how you used that $400K of maintenance? Even at .10 premium it would mean about 400 of them, right?
Sure Nic,
After 7/1, I'm ready to stand "naked" before God. (I couldn't help myself...love you skinny dippers!!). Seriously, I was a college math teacher for several years and I love teaching, so if sharing my bad (a few good) habits can help, that's what it is all about.
Anyway, I think you meant $10 spreads, and yes that would be 400 contracts, but most spreads were of the $5 variety, so I could sell 800, or 1600 using IC's.
Most weeks I had 3-400c on SPX spreads, sometimes SPX IC's, and then another 3-400 contracts on AAPL, AMZN, GOOG, PCLN...the usual suspects. And many weeks those were IC's as well. Most weeks I limited my investments to 75-80% of the total capital.
Despite the comments about tough fills at OH and elsewhere, I did not see too much of that. btw - I had about 20% at TradeKing. Good fills there too.
My typical orders were in quantities of 25, 50, and 100. For SPX I used 200 many times.
The week of 7/1 I was not feeling well, did not have alot of time to study the market, so I went with my favorite. SPX. Always the best premiums, and the 200 free trades I got from OH covered the index fees as well!!! So that fateful week, I was 95% invested, and 100% of that was in SPX. As late as Thursday night I was still confident the SPX rocket ship would falter on Friday, and in fact, it went below 1320 many times on Friday before noon. So I went back to bed. The only survivors were the 1340/1350 spreads and I only had 20.
Excruciating neck pain, relived by Vicodin, and risking your life savings is easily the most reckless thing I have ever done. My wife is approaching a nervous breakdown. What's done is done, and I have to get back to business. I have been able to revive my consulting biz, and already have sufficient work to cover our monthly expenses. Thank God!!
Nic - This is a lot more than you asked for, but it is cathartic for me and may show the others that this is NOT a passive sport. And, like Jerry, recover may be possible, even for me.
I have taken out $20K for an emergency fund. Actually my wife demanded it. So with $20K in the game, I'm pressing on. I am looking for 3-4% (.15-20 cents) ROI. 8% on SPX spreads, but only 5 of those. A bit risky I know, but I NEVER leave the screen!!! In the last two weeks all spreads came in great with cush to spare, but I stay ready to bailout as soon as anything moves against me by .10.
btw - I do **NOT** recommend anyone strive for 3-4% returns. 1% equates to around 60% per year!!! My motivations are different. I need at least $150k (@ 2%) to cover my expenses, so I have to double my $20k 3x before I can retire, again. With my consulting income I might get their in 18-24 months. Not too bad, all things considered.
Good Hunting,
rick
Rick - Sharing your experience openly has been a great lesson for people like me. I really appreciate all the information you have provided on this forum. Though by nature, I tend to be very conservative this enforces a discipline in me to earn those useless .05 cents, sleep well and get along with my life! I still see a failure with my approach one day, but whether I avert it before it happens is what remains to be seen.
Rick, I've followed your comments since that dreadful day, and I must applaud your resolve!! I can almost guarantee that had I faced what you've faced, I'd be a complete wreck. Granted, we all have to motor on from our bad experiences, and I'd hope that I could muster as much courage as you've shown. I feel for you and your wife. I can't imagine the pain, but wish you the absolute best!!! May the trading gods look kindly on you from here on out!!
Rick, sincere thanks for sharing. I think many on this board benefits tremendously, and I wish you and your wife a fast recovery. I just hope you're not rushing things too much, as mistakes usually happens when pushing ones luck.
Having said that, as you know I took quite a hit that day as well and the only reason I didn't get wiped out was that I only had so many of the SPX spreads that got caught. I'm not ready to push back just yet, it's an important process for me to first understand what happened. I do think this one could have been avoided, the premiums were still reasonable when I knew I was in trouble, but I'm not so sure about the one a couple of weeks ago when it closed at 1300.16 and I also got caught. That time I had what I felt a reasonable cushion on the last day, about 20 points, and it just kept creeping downwards. When it was down at 1306 and I really started to get worried, the loss would already have been significant, so it becomes, what you describe earlier, an "unthinkable" alternative to bail given the unlikeliness of it going down yet another 6 points on top of the massive drop it already had done during the day. I still don't have a good safety mechanism for this situation, where you have let's say 20 points a day for 4 days, and it actually goes down 20 points every day. Where do you bail, if the premium still hasn't doubled or tripled?
Rick, it sounds to me that your "tight" style requires you to be very vigilant and take numerous losses, as it doesn't take much for a trade to go against you that close and requiring an abort. It sure also sounds like you're very close if you're getting .15 to .20 on a weekly spread? What are your rules today?
Kenny,
I'm in GOOG with a spread at 485/480 @ .15. Got in yesterday but I'm having second thoughts on this trade since earnings will come out tonight. Right now it's going against me with 45 points of cushion. Not sure if this is engouh. Open to any suggestions.
Paul, if you're having second thoughts, why don't you try to buy it back at .05 until you've decided.
Personally, I would close it. It doesn't seem like the risk reward is in proportion to what could happen if the earnings are bad. Most of the dive would come from low forward projection.
@Paul,
For me it's too risky to have only 45 pts of cushion right before earnings report. I closed half of my position already. I'm trying to dump the rest of them today as well.
GOOG can dive more than 45 pts tomorrow if the report is not good!
I would close it.
@All, as i said before my SPX 1235/1240 is pretty much a done deal. But I wanted to mention that I have an order in on the 1355/1350 call for 0.05 just to grab the extra money on the table. Basically it is 37 points of cushion for 1/2 day BUT I have the AM close on Friday to worry about, so that is why im going as far away as i can.
Fulgore, not sure why you are worried about the AM close on Friday. I would think you would be worried if it was a PM close on Friday? Unless I'm missing something?
Not sure if you were here when we discussed this. Once Thursday closes I can not exit my position BUT the market doesn't settle everything on my trade until OPEN AM Friday.
That means if my trade goes south today and i only have 10-15 points of cushion left at the end of the day on Thursday (for overnight), i am now at the mercy of the AM open of the stock on Friday. If overnight thursday the stock drops, i am now in a bad position and can't do anything about it.
I hope I explained my view well enough.
@All as I just posted to Chelski my trade went through. I feel confindent on the IC open on the call side.
Fulgore, I understand now, so, this weeks weeklies are the monthlies that expire Friday AM? I forgot!
To how I understand it all yes. That is something I take into consideration every 3rd week for this style of trading.
I truly forgot, well, I'm more a happy bunny! Cheers Fulgore!
@Chelski, I'm also very happy because on Wednesday when I checked my trade history to enter my trade into my trading log book I noticed that ToS gave me 0.15 premium on my 1235/1240 position when i had it at 0.10. I am not complaining. And so my RoI this week will be almost 2.5% after commissions. This is kind of high for me but the trade was calculated and aimed for 0.10 at 80 points out on the put side, they gave me 0.15 on it, meh ok haha.
I'm also excited because I am $10 away from moving up to my next rank. For me this means i get to do 1 more contract of the spx spread if i want. This will result in the same ROI just more money for me cause i now can use more maint.
I hope everyones positions are holding well.
Fulgore, that's nice of TOS! lol
Poor you on those commissions. OH gave me 100 commission-free trades each on my trading and pension account. That's around $5K savings. I think OH thinks we'll let this guy grow his money quicker now and we can get higher commissions from him later when he has the big bux! lol
@Kenny, Nic, thanks for your help.
I decided to get out of the position. The market looks pretty weak and right now there is some real risk out there....is it going to be 2008 all over again?
WOW WOW GOOG!!!
GOOG is up $55 after hours and is pulling up everybody. My PCLN spread was getting spooky but GOOG's push gave me another 5pts cush. This might pull the whole market up tomorrow after down day today.
Cheers GOOG PUTters!!
rick
Fulgore,
I really like your mojo - can I steal some?
@Fulgore - I considered doing a IC for brief moment after I saw your post, but couldn't force my mind though it had a nice cushion :)
Will have my maintenance released tomorrow morning. I was just checking TOS for next week's expiration and it is really juicy. It is very enticing to make some serious money, but when premiums are high my caution sensors also go up!
A slight thought at the back of my mind, market is going to go down big time this week, may be about 100 points by next Friday. Thinking if I should do calls this time, rather than puts. 1380/1400 gives 10 cents as of today. What do you all think?
I closed my GOOG put spread prior to ER as well. Still a gain and I will be sleeping well. 250 bucks is better than in the hole thousands! Just wasn't feelin it today and got the hell out of Dodge. First order of business.....PROTECT CAPITAL!
I'll take a hard look at the SPX tomorrow. Good thing I have my maint. back!
@Avid, A last minute deal with the gooberment clownshow could send this market much higher. If you think you have enough cushion...go for it!
Later, RK
I hope the VIX remains above 18ish next week so we can open positions with lots of cushion. Hope everyone is doing well this week!
*** It's now official - SPX settlement price for the July monthlies is: 1316.02
Congratulations to those (Fulgore) with short-call spreads above the settlement price and those (again Fulgore and others) with short-put spreads below the settlement price. Fulgore, it's been a real pleasure watching you work this market. You're making all the right moves dude! I knew when you posted that short-call spread, it was a winner, it just had that "feel" of being a winner right from the "get-go"...nicely done!
Dave - Thanks. Can you give the link or details where you see this official closing price every time?
I checked in cboe but couldn't find the right place.
@Hannah, I'm not sure its the mojo, but it could be :)
@kris, I felt confident in the call side of the IC. So i went for it. Regarding the position your asking I only open trades on Monday for weekly's because I don't like not having control for the weekend.
Seems with the AM settle today everything is ok with my SPX trades for this week.
Results
2.5% approx after comms - note this should be lower but my broker messed up and gave me more money :)
avid_kris - not a problem, here you go:
Go to: http://www.cboe.com/
1. Move your mouse pointer over the "QUOTES & DATA" tab
2. Select "Index Settlement Values" (9th selection down)
3. This will display the monthly CBOE settlement values
4. On the left-hand side, about half-way down, you'll also see a link for "Weekly Settlement Values". Click on that, to, of course, get the weekly settlement values.
To get the monthlies, you can also go to: http://finance.yahoo.com/ and type in the symbol: ^SET in the "Get Quotes" box. NOTE: this only works for the monthly options, not the weeklys.
Found $150 on the table this AM on AAPL call spread after the GOOG nitetime run up started loosing steam. All seems well for all other trades this week. Won't figure ROI til its over tho. Seems like bad juju (as opposed to mojo). Good luck and happy weekend to all.
@Dave. Thanks.
I put an order for SPX 1150/1125 for 15 cents. It is sitting there forever!
Fellow crumb traders, as our SPX options expired this morning, did you have your funds freed up today and at which broker?
Although I have no complaints with OH and fills are good, I found out my funds are not available to trade til Monday. I called OH and they just said their system is not 'real time'?! (that's their explanation) and the funds would be available on Monday to trade. As an "exception" they made my funds available to trade for next weeks weeklies (although I don't plan to put on trades today for next week given the debt ceiling outcome this weekend and want to see the how the market reacts on Monday). It's just the principle of having my funds available if my trades expired AM.
2.19% ROI this week, 3.98% ROI rolling 4-week period. Thanks Jerry! :D
@Chelski - Yes TOS released my funds at around 10.30 am CST. My order just went through. I have the 1150/1125.
TDAmeritrade has done nothing to release fund yet - All expired positions are still open!! Grrrr
From August 2011 onward TDA will increase the option contract by 2 cents. Declared that the fee of 1.2 cents were not absorbed since 2009.
avid, at least some brokers are doing right by their clients and not "keeping' our money for their benefit til Monday. Well, at least it's only once a month, but I'll be calling my broker every month to release my funds. Good trade BTW on your 1150 25pt spread!
TK does not seem to release monthlys maintenance on Friday either. I'll watch to see when tho I don't want to trade today anyway. This debt ceiling thing really has me freaked out. Some of those guys wouldn't mind shutting the whole thing down and crashing the system, IMHO.
Chelski, I just called my broker on the topic you raised. I knew what they were going to say and as of now all option trades held over-night are T+1 for release of margin money. So, even though the monthly options settle AM, my broker will not return the margin money till the next day (Monday). They did say if enough people complain about it, they may change it to help them retain clients. I complained about it, but I know my one complaint will not be enough for them to change that policy. Those ROI numbers are impressive. Can I ask you what type of trades you're doing that have resulted in those impressive ROI returns?
Hannah, I got that same email yesterday from TDA. I'm already paying those fees with TradeStation. TDA is going to have to change their commercials now...the ones that claim they don't charge these fees.
Dave, I just trade the SPX 5pt spreads, this week I had some 1250s, then entered into 1265s, then seeing the market go my way, I legged in the call side for 1385s, which I forgot to mention on here middle of this week.
I was thinking harder about your GIGO method. So when you trade a naked today for next week and plan to close on Monday or Tuesday, does the direction of the market have to go your way for you to close with a profit, or is it because of time decay over the weekend it doesn't matter which way the market goes you can still close out for a profit?
Jerry, I paper traded the GOOG calendar/diagonal call spread this week and made 10% ROI this week. Pretty good, but as I'm now used to receiving premium upfront, at the moment I can't make myself want to trade calendar/diagonals as I have to give premium upfront!LOL. Also, as apposed to vertical spreads, calls here mean your bullish and vice versa. So the opposite thinking.
I should've put a calendar PUT spread on to see how much I would've lost.
Learning about these horizontal and diagonal spreads has made for a real eye opening week.
In my cautions first foray with them I bought the following this week:
5 July/Jan12 AAPL 355 Calendars spreads. Closed out with 5% gain (kind of messed up timing of exit--could have made more)
5 July/Jan12 AAPL 360/365 Diagonal spreads (still open and up 8% as of this posting)
5 July/Jan12 WYNN 160 Calendar Spreads (closed out with 14% gain)
20 July/Jan12 SLV 38 Calendar Spreads
(Closed out with 7% gain)
A big thanks to Jerry for steering me toward these. I know that the market has to cooperate to achieve these kinds of results and that it is not always going to be this way, but damn......
Hi everyone, quick question. There is an upside for trading calendar spreads versus debit spreads? It seems like with both you have to be right on the direction of the stock, correct? But with debit spreads there is a higher return than doing calendar spreads. Am I missing something? Thanks!
I did my first GOOG calendar spread
this week on wed afternoon. I bto sep 535 call abd sto jul560 call it cost me 2250.00 and fri morn i sold out for 3100.00 a 37.7% roi.
My plan was to stay in it for a few weeks and collect the prem. from selling calls but that earnings announcement sure changed things. I think I will wait a few days before doing another one especially with this mess on the debt limit too many unkowns,thanks to Jerry for the great post on this type of trading.
Hi all, wow some good trades out there. I have been away from the computer since Wednesday. I had to give my daughter a crash course with the GOOG 560 jan/july spread. I had her watch it and close near noon for a great return.
so I aphorize for being away and missing all the good notes. Some asked if these cal spreads only work in bullish mkt..no. But you do not want a BIG bear mkt. For those of you still considering using the calendar/diagonal spreads. See my new post.
Jerry
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