Calendar Spread Basic Setup Question

NEVER use stops with options. Price behavior is unpredictable in short term moves and you can be stopped out unnecessarily, and obviously at a loss.

 

Thanks all for taking the time to reply. I'm learning it is much more complex that many instructional videos appear.

 

Did you just say NEVER

 

the only situation you should say NEVER is when it comes to trade off of instructional videos

 

never have unprotected sex with a girl who has aids.

never listen to the dawn.

 

Yep.

Finish this haiku, please.

 

never say a 12 standard dev mov won’t happen.

 

Then you have theta and vega working against you, and the only way to profit is via gamma.

PS - the only way the back iv will be higher than the front iv is if there is an event, like earnings, in between the two expiries. And in that case, the back iv is likely to rise with each passing day, thus working against the cal.

 

If there is an event that pushed the front IV so materially higher, I would most likely consider buying a strangle/straddle to take advantage of it especially if the price is relatively cheaper and hope that the infinite gamma takes over. LOL

 

Can you please explain to me, in simple terms, what infinite gamma means? To my virgin options ears, it sounds like free money. So help me understand infinite greeks.