[TheOptionClub.com] Re: Basic Calendar Question

 

I read the responses and thought that maybe there is another reason.

Maybe the other reason has to due with strike levels? I know the ES has a much finer grained strike level count, in contrast to say NDX. I know time and time again we would love to be in the middle of two strikes. Yes there is the NQ, but its not what we play.

For example, let's say that you have Apple at 200, with a 5 USD strike level difference that is 2.5%. Whereas with a stock trading at 5 USD and 2.5 strike difference we are talking 50% difference. Even with a 1 USD strike difference it is 20% of the underlying.

Outside of that, theta, and all of the other things work as the same. With respect to commissions, yeah that could be an issue, though that depends on the brokerage and the number of contracts that you are executing.

Christian

--- In OptionClub@yahoogroups.com, "drrobhansen" <robhansen5252@...> wrote:
>
> I had heard either during a webinar or maybe in a magazine that calendar spreads are best put on with high priced stocks. Is there anyone that would explain to me why it would be advantageous? Or maybe I'm just mixing this up with some other strategy?
>
> Thanks,
> RFH
>

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