The Markets are Always weird. -- When is this place ever a smooth, happy, magical, yellow brick road... The marketplace is Part art, part science...takes skill and wizardry to handle and tame it successfully in the long run.
sle, can you expand on the "roll down along the curve"? I think I know what you mean....ARe you referring to curve being options and the expiration time line or the futures curve?
Yeah...odd price action. Shorts are in control I imagine and their buyingback power gets triggered on a wink
Meaning that the cash is significantly under the futures of the same expiration as the option - if all stays the same in the world, you are gonna make that difference as the futures will converge "roll-down" to spot. It's a statistical trade and only makes sense in the markets that do not have a cash-and-carry style arb, e.g where futures are not fungible.
Got to thinking. As a trade like this moves ITM could one effectively buy the next month October against the SEPT futures leg, making it a 1M Calendar futures spread (U/V) Would that lock up the trade & then all you have to do is wait out the decay? The other idea also being if the mkt rallied making the put then an ATM/OTM, could one again do the same effectively neutralize the open futures leg to a 1M calendar spread & waiting out the trade to expiration. I believe there's a hole somewhere....attempting to piece it all together. Ghoulie, Whatta think?
I bought GDXJ Puts that expire This coming Friday August 19th. My fill was Friday August 12th on the open on the 50 Strikes: 0.50. This in my opinion is an excellent trade, I'm sure most will argue that it is not because of the massive decay. I think I can easily make 100% on this trade.
Calendar spreads in crude are a science unto themselves... Off the top of my head, Sep-Oct shouldn't be anything too exciting, but I am just not an expert on all the rinky-dinky aspects of the crude mkt.