SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Option Spreads, Credit my Debit
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Tim O. who wrote (1420)5/8/2000 12:35:00 PM
From: KFE  Read Replies (1) of 2317
 
Tim,

I initated a bull calendar spread on SLR today. Long WRLAE (Jan02 25C) and short SLRGI (Jul 45C) for a net debit of 17 1/8

This seems to be an increasingly more popular type of strategy (writing shorter term calls against LEAPS= calendar spread). I like that you shorted a higher priced option because many who advocate this strategy have done same strike long calendar spreads that when the underlying crosses the strike price the trade becomes delta negative and they find themselves in a bearish position and can't deliver the LEAP against the short call assignment as in a normal covered call.

Calendar spreads were a large part of my trading when listed options first starting trading because the markets were not very efficient then and options were only available on the assigned expiration cycle. I would short the front month with anywhere from 3-6 weeks before expiration and buy the next cycle month (4 months left). The front month was always comparatively overvalued. It also helped that a big move in the DOW was 10 points.

Enough nostalgia... I currently use calendar spreads as mostly volatility plays. Long if I think volatility is going to go up, short if I think the opposite. One play I have done with calendar spreads is a FOMC play. I will do a long calendar spread in an Index option (usually OEX) about 1-2 weeks before the meeting and unload it the day prior to the meeting or before if IV spikes. The nervousness will sometimes cause a spike in the VIX. Didn't do it this month because the VIX is at such a high level right now that I don't like the risk/reward.

Regards,

Ken
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News