what strategy is this?

Discussion in 'Options' started by buybig, Jan 14, 2008.

  1. buybig


    looked @ my reference sources and may of missed. what strategy is this?

    sell near + 1 or 2 strikes call

    buy far (3-6mos) strike call

    equal ratio debit spread

    sounds like a calender but strikes are not same.. could be a diagional but see above..

    could be smoking crack and missed it!:cool:
  2. could you be more specific...

    as in xyz trading @ 50

    - 10 Jan 55 call + 10 Apr 65 call

    or -8 Jan 60 call +20 Apr 70 call

    diagonals (if that is what it is) can be done for a credit or debit depending on how far apart the credit/debit strikes are
  3. buybig


    sorry for being vague..

    underlying @ 50

    buy 50 three months out

    sell 55 front month

    not a ratio trade..

    i suspect its a form of calender.

    debit calender?

    thought calenders were matching strikes..
  4. timbo


    Is this really troubling you?
  5. buybig


    ummm.. no.. why:confused:

    just curious..

    is it a strategy that contradicts text book gospel?

    why waste time responding w/o an answer?:confused:

    do you have an answer :eek:

  6. its simply a diagonal...a diagonal is a calendarized vertical spread...again depending on the volatility could be done for either a debit or credit. If only a 5 pt spread then most likely a debt. Calendars ARE matching strikes. Diagonal's are different strikes, different months
  7. buybig


    10-4 thanks for the help.

    so to make sure i understand.

    vertical = same month long and short call different strikes

    calender = diff months w/ same strike long and short call

    diagonal = diff months w/ different strikes long and short call
  8. Yes. A diagonal is both horizontal (time) and vertical (price).
  9. theta636


    Helpful hint -- Look at option quotes in a newspaper, rather than online, and it will be very clear why some trades are called diagonals and others are called verticals. Lawrence McMillan has a paperback studyguide that is helpful for learning the basics. I also recommend his book, Options as a Strategic Investment. Good luck with your trades.
  10. That's SOP for Timbo.
    #10     Jan 16, 2008