Chris Smith's Comment to Jeff: When I trade calendars, which is what the Super Put is, I tend to keep the back month option just one or two months out and have cash in reserve. When the price of he underlying reaches on my the break-even points, I'll put another calendar on to broaden the profit zone.
Chris, I've taken Dan Sheridan's course and he handles break even points differently. If the stock moves to the break even point, he will take half of the original calendar off and move it to the next strike. From your post, it looks like you leave the original calendar as is and just add another one higher (or lower as the case may be). If I'm correct in my assessment, do you put on an equal number of calendars at the new strike? This does seem to increase risk quite a bit as well as your total outlay, which in turn requires you to make an even greater percentage profit on the trade to reach your goal in the position. If the stock keeps moving against the original position, you end up taking a bath on the original calendar and start losing on the second one. I got burned on AAPL last month with my original calendar at the 115 strike, and I chased it all the way to 145 with 10 point increments. However, I was taking away from the original 115 calendar and putting on higher ones as the stock moved up. Could you kindly comment on this?
Thanks,
RFH
--- In OptionClub@yahoogro
>
> Jeff,
>
> Nice video. I always get a kick out of the names folks come up with to
> describe option strategies. What you got there is a synthetic call
> calendar spread on SID.
>
> Covered calls have gotten a bad rap lately since folks got gun shy after
> the market sold off. Discover Options did a nice study to show the
> effects of covered call campaigning using the QQQQ as their underlying.
> It did a nice job of demonstrating the strengths and weaknesses of the
> strategy and demonstrated the importance of being consistent with the
> strategy.
>
> I'd suggest back testing this "Super Put" because I have a feeling its
> not going to work quite like you think it may because you now have an
> upside break-even point which is not present with a straight covered
> call. When I trade calendars, which is what the Super Put is, I tend to
> keep the back month option just one or two months out and have cash in
> reserve. When the price of he underlying reaches on my the break-even
> points, I'll put another calendar on to broaden the profit zone. That
> type of adjustment won't work as well with you Super Put because the
> capital requirement to buy the stock is so much greater. So, my guess
> is that John Brasher will have you manipulate the trade by rolling the
> existing put or short call.
>
> I've seen a couple other trading services offer similar strategies, too.
> It would be kind of fun to have a contest to see who comes up with the
> most clever name. I'd lose because I just call it a synthetic calendar
> spread. Boring, huh?
>
> Christopher Smith
> TheOptionClub.
>
>
> --- In OptionClub@yahoogro
> >
> > I have not posted hardly at all in this group since I spend most of my
> time int he Just Covered Calls group. But they don't want me to talk,
> discuss or even mention SuperPuts in that group.
> >
> > A SuperPut is a Covered Call with a long-term protective put. The idea
> is to use the Put as protection and continue to write Covered Calls
> against the underlying until the time is right to exit - depending on
> many factors.
> >
> > The term SuperPut is a trademark of the CallWriter service and web
> site. I am an avid subscriber to that service and I have been studying
> SuperPuts for a few months now. I decided to open on in my demo account
> at Interactive Brokers and test the concept in this undecided market.
> >
> > I make a lot of demonstration videos and I made on entering a SuperPut
> on SID today using TWS Option Trader. You can catch the video at YouTube
> (http://www.youtube.
> http://buywrite.
> on my blog).
> >
> > I plan to keep producing videos on this trade as I make adjustments
> and finally exit in the future.
> >
> > Comments and inputs are welcome.
> >
> > Jeff W.
> >
>
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