Calendar spread

Hello
I’m lookibg to sell a calander spread on ES at 2550 exp 1/8 does it make sense that if it expires tonight I profit 250$? Loss is 500$

 

I'm away from a trading computer, but it sounds like you have it bass-ackwards.

First, nothing in ES expires tonight.

Second, you're taking some figures from a software platform that you do not understand.

Do this on a piece of paper, first. Map out the date of expiry, then the market price, then you're purported position (long or short). THEN go to the platform and see what your inputs produce.

BTW, putting up/trading a backwards calendar is a superb way to wipe out your account.
Were you to buy the 11/28 2550 put (for min. 5¢) and sell the Jan'19 2550 put, and have the market go to 2575 at noon tomorrow, your owned near-term put would still be worth a nickel, while your short 2550 January would have skyrocketed in value against you, as would the escape expiries around it (from which you would buy protection).

"Careful out there!"

 

thanks so selling is not good

 

@tommcginnis what about an iron condor ?

 

Out of curiosity, how much tastytrade/optionalpha do you watch?

 

Sho

Never came across those things should I watch?

 

No. Your posts are very much about "being long time decay". Something those sites only promote. What's wrong with being long a straddle?

 

Cause then u need the market to move at least 5/8% before u see anything when u sell a covered call u making money as long as it doesn’t reach the strike

 

Ahh thats right!! How could I be so silly. Carry on.

 

As a newbie mom and pop retail, i tell you the hard lessons I learned since 2013:

1. There is no free lunch in this business. Folks you trade against are usually market makers and they are professionals. They need your money to feed their family, not the other way around.

2. If you have no idea whether the underlying is going up or down, trading directional, simple or multiple (calendar, spreads..) will net you very little in the long run after commissions and slippages.

3. Your broker will love you when you follow tastytrade: trade small and trade often.

4. If you short naked and leverage, sooner or later you will see a huge loss. If you don't leverage and covered, your net profit will be meager.

Go buy a book on options, read it from cover to cover until you understand how options are priced, etc.

If you can hang on and survive the first couple of years, you may find it rewarding to swim among the sharks.

Best wishes for the holiday.