Early Assignment On Calendar Spread Question

Discussion in 'Options' started by kodiakbuttons, Aug 27, 2008.

  1. Hmmm. Your trading style is rather commission intensive. I'm usually in my positions for weeks, sometimes months. My commissions are a small proportion of my risk and reward.
     
    #11     Aug 28, 2008
  2. exactly...what you want in a calendar is little volatility/movement in the front month but a big move in the back. Subtle differences in trading calendars with stock and indicies. You want to look at indicies and equities with enough volatility to move but not really high volatility. For me a comfort level is ~ 20-35,(IV) sometimes higher if you are very familiar with the equity or have a directional bent.

    Put calendars are generally more profitable but hard to find. The beauty of a put calendar is you can be wrong on the direction and still make money if the stock doesn't move too far away. With $1 commission you shouldn't be so comm intensive so you are probably trading too much. Calendars are commission intensive so you have to have enough movement to make it worth your while. You may want to paper trade them for awhile to get a better feel. Calendars can morph into diagonals and verticals to generate more profit. Bottom line is that (in general) they are low risk/low profit/high probability trades. Risk is defined you should (almost) never lose more than initial debt.
     
    #12     Aug 29, 2008
  3. You want to get the 'per-ticket' charge reduced to something near zero. There is nothing wrong with $1 per contract, but adding $7 or $8 to cost of trading is not justified - unless you just love the broker and are willing to pay up to use that broker.

    Also exercise/assignment fees cannot be $15. Even $5 is too much to pay.

    300+ contracts per month is NOT small. It's certainly not 'big'- but it's enough that your broker does not want to lose your business.

    Mark
     
    #13     Aug 29, 2008