this is an interesting discussion. i'd like to use some real numbers. selling the jul 740 put at 23.39, long the aug 740 put at 25.88, short the jul 770 call at 9.41, long the jul 780 call at 7.1. the put calendar debit is roughly offset by the call vertical credit. is that an important part of the strategy? how is this better than a calendar? are you doing this only on indexes and low volatility stocks? thanks!
Real numbers are also accurate numbers, which yours are not. You don't say when you attempted to copy these, so perhaps next time you could say when you got your numbers. It is best to use EOD numbers so others can see them also, and you should triple check them for accuracy. For example your price of the aug 740 put is not even close to what it should be. As of Wednesday close the Jul/Aug 740 put calendar can be bought for around an 8.40 debit. The July 770-780 call vertical can be sold for a 3.00 credit. My own opinion is that the put calendars is too far out and that the sold vertical makes little change in the profit graph.
OK, I'm back. IBM is in a topping pattern, so Fri I shorted the Jul 135/140 call in the am. The market sat around and did not go down very much, so I "hedged" the vertical (did not want to go over the weekend) with a Jul/Oct 135 put calendar just before closing. Not very pretty, but if I am right, the market goes down and I complete the Iron Condor with a put vertical. This is legging into an IC by using the calender as a hedge. I have never done this before, so it should be interesting. Helpful comments welcome. PS. 1. This is not a monkey calendar, since the vertical is not above the calendar body. But it looked interesting and I just threw it into this thread. 2. My calendars are 6 to 8 weeks away from expiration. The whole "30 days before expiration" just doesn't work for me. 3. Normally I don't do three month backmonth calendars. Jul/Oct is just not cost effective, but, again, I am experimenting with the trade because of the pattern. I really hate the IC, but this may bring back the love affair if this works. The IC just doesn't work for me unless I can safely leg into it. 4. My broker does not charge me a ticket charge, so I can goof around without getting killed by commissions.
If July will be a reporting month, your position will become a hostage to July vols ramp. July / Oct tenor is also not sustainable in this case. GL
Good point. I will be out of the position before earnings -- probably by the end of June, but I will watch it closely. I do watch for earning before placing a calendar, and that's one reason I go for the longer time period. I hope to be out of it before I get caught in the volty move. IBM is not GOOG, so I think I am giving myself enough time. Thanks for the comment.
No , you probably wonât be able to exit with profit before report ; that why I used word âhostageâ. Also , this is a ratio trade ( 2:1 in this case). You best scenario is for IBM to post a report day after 7/18 (close position in this case) or for stock to pin 135 after report in July
OK, I guess we shall see. As I said, I normally do not do such a wide month calendar. If I only make 10% on this one, I will be happy. Normally I go for 20% or better. Do you know how many weeks the ramp up normally occurs before the report in IBM?
The outcome of this one particular trade means nothing; I was referring to overall concept. Anyway, it was JMO : feel free to delete my posts from your thread
Your thinking is obsolutely correct. Some people may not know how to finance their positions at the lowest possible cost, for equal amounts of loss and profit.