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!
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
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..
ummm.. no.. why just curious.. is it a strategy that contradicts text book gospel? why waste time responding w/o an answer? do you have an answer :eek:
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
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
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.