Peace, Thank you for your reply! To be more specific on my end, my trade is short Aug17, Long Sep21. The other gentleman's trade is much more short-term oriented. This would give me more time for my long to go ITM, if ever. I can afford the vol crush on the longs, so long as the bulls/bears continue in their trajectory after the short expires worthless. We'll see. Peace, Amahrix
Peace, What's the purpose of modeling the vols on the leg, in general? And what is an example of doing so? Thanks in advance. I think the trade is fairly black and white. I expect the stock to rise/fall just enough in the short term to let the shorts expire worthless, I then expect the stock to continue rising/falling to profit off the long. Because the long was financed by the shorts, it was purchased insanely cheap and if it goes ITM and rises slightly more, the trade begins printing lucrative profits. The longs are also bought 1 month 1 1/2 month out, NOT the following week. The short would be placed on a Thursday, earnings after market close, giving me 1 full trading day until they expire totally on the Friday, after market close. Continuing the hypothetical situation, if the stock drops 4% & my shorts expire worthless(since I sold further out-the-money) and if the following week/month, the stock continues to drop then I begin printing hefty profits via the long put that I purchased cheaply. On the flip side, in a rising market, the IV will get crushed on the long call but made up by the time I have left on it, so that the stock continues soaring the following month. Risk is limited to debit paid, profit is unlimited. Very convex. How often does this trade actually happen the way its supposed to happen is a different topic. Many small consistent losses will be paid for by the handful of wins because of convex returns. Maybe, maybe not. No? EDIT: I do recognize that I am narrow-minded and too straightforward on the trade and disregarding a whole host of things... just want to still express my thoughts on it so I can get other peoples opinions and to be checked by others. Peace, Amahrix
Peace, I just realized your strikes are very tight. That, for sure, is a hail mary, lol. I was thinking much more OTM. Peace, Amahrix
That is not my position, was just showing you an example of double calendar. I mentioned I only have single calendar position on M.
Peace, Ended up doing a put credit spread but deployed the calendar on NWSA(short $14 Aug17, Long $14 Sep21, and BABA(short $172.50 Aug17, Long $172.50 Aug24). Trying to get a diagonal/calender in on GS. God willing. We’ll see. Peace, Amahrix