What happened with volatility over the course of the trade? Aren't calendars long vega? -cg
On Mon, Mar 1, 2010 at 5:31 AM, Meuter Gisbert <gismeu@gmail.com > wrote:
Hi Robert,
you say,I don't think that obsession will make you money. You need to be neutral, colourless and unbiased.
<<I am obsessed with calendars and need some tips.>>
Also, if you don't want to papertrade, at least don't put on so big positions. Two calendars would have been enough.
best, gis
P.S. If you absolutely don't want to papertrade, ask yourself why? The answer might be quite revealing
On Sun, Feb 28, 2010 at 11:49 PM, RobertH <robhansen5252@hotmail.com > wrote:
I've been trying sooo hard to learn calendars, and have gravitated to Dan Sheridan's method of calendar adjustment. I opened a position in McDonalds on the last day of December with the stock at $62.44, buying 12 of the Mar 62.5c and selling the Feb 62.5c for a debit of 0.26. When the stock hit my upper break even point on Feb 3rd, I peeled off half of the 62.5 positions for a credit of 0.21, and initiated a new 6 call contract position at the 65 strike which cost me 0.49. So now I have a double calendar, all calls, at 62.5 and 65. The profit loss graph looks like a boy scout tent with very little sagging in the middle. Well, I couldn't get out of the trade with a profit all the way to the day before February expiration even though the stock was safely between my strikes. Also, my profit loss graph (at expiration) still looked good. I exited the trade on February 18, closing the 62.5 spread at 0.31 and the 65 spread at 0.54.
On paper, I was ahead $30.00 after all that trading, but factor in commissions and I lost $78.84. What am I overlooking here? This should have been a slam dunk. From what I see, I should have let the short Feb 65 call expire worthless while the March 65 call shot up from 0.60 to close the week at 0.72. (Didn't know that in advance, though). But I didn't think anyone holds calendars all the way to expiration.
Anyone with calendar experience care to take a look at this one. I am obsessed with calendars and need some tips.
Thanks,
RFH
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