Yes, both do have limited risk, but in a market with rising volatility, one would be less likely to lose the entire amount risked with a calendar spread than one would with a credit spread. Credit spreads are neg vega and positive theta; calendars are positive vega and positive theta. Of course, a move of overwhelming size would turn either of the two into toast.
I wasn't thinking clearly when I wrote that. Calendars have an advantage over credit spreads in times of rising volatility, and rising volatility often precedes catastrophic market drops (but not always). I'll put it this way, if one MUST sell theta now that the market's volatility is rising, I would suggest the calendar over the credit spread. Or, even a combination calendar/credit spread. Buy a otm longer term option and sell a closer to atm near-term option (for instance, buying a Nov 120 put and selling an Oct 119 put).
How is that selling theta? You're long theta in the Oct119p/Nov120p diagonal. Are the options in this example itm or otm? It wouldn't make much sense to trade an ITM put calendar/the otm same-strike call calendar due to slippage/liquidity. As an example... the SPX Oct1175p/Nov1180p spread is trading 18 handles, and the Nov 1180p[$20.50] is not decaying > the credit rec'd on the Oct 1175 put bid at $2.50.
MoMoney, Thanks for the link -- I have Summa's book. Please call TOS and ask for ES options. You'll be one of several who have (incl. me) and they just might do it.
Phil, Ask TOS again for ONLY options on ES (rather than the whole universe of futures options). I believe they are considering it since they already have ES futures -- IMHO serious possibility they might add ES options. I have found that it is MUCH easier to trade with just one account and one platform, especially when the market gets tricky....
PHIL, I agree, &*&#%& October, what the $*%^ was all these expiration games about? We're both short 1165. Think SET will dive below that?
I have asked a few times and have had conversations with the President and one of the founders and they did tell me they would love it but down the line. Hopefully they are moving more to do it and will chat with the President again next week. Phil
No I doubt the SET will be below 1165 with the market at 1177. I do not see a 12 point SET tomorrow on a non-witching day. Phil