Re: [TheOptionClub.com] Re: Selecting Calendars

 

Bill,

would you have a link or title or anything that would help me locate that video from Dan Sharidan, that you mentioned about that RUT adjustment?

Thanks heaps, gis

On Tue, Jul 20, 2010 at 3:44 PM, William Fletcher <wnfletcher@hotmail.com> wrote:

That is very useful.  I just put on (paper trading) an RTH and an OEX ATM calendar.  These are nice and big.  I watched Dan's webinar again where he adjusted a RUT trade through a 10% price drop.  Trading a small underlying would turn a profit into a loss under these conditions.

Bill

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To: OptionClub@yahoogroups.com

From: robhansen5252@hotmail.com
Date: Tue, 20 Jul 2010 18:45:44 +0000
Subject: [TheOptionClub.com] Re: Selecting Calendars

 

Dan says that you should try to pay $1.00 a contract when trading these guerrilla calendars. Nevertheless, if you put 10 of these on, it will cost you $320 before commissions. If you are shooting for 20% profit, you should take the commissions into account, so add $60 to the projected 20% ($30 in and $30 out) and you should be looking to get out when the value of the spread is $444. So the spread started out at 0.32 and you want it to appreciate to 0.44. This is certainly attainable. Then you trade 100 of these next month! (Right).

RFH

--- In OptionClub@yahoogroups.com, "WilliamF" <wnfletcher@...> wrote:
>
> I have started to work on guerrilla calendars seriously. I have constructed a set of rules based on data from Sheridan and others.
> I was looking at an Aug Sep WAG ATM calendar. The 29s are 96 cents for the front, and $1.28 on the back (these are bid and ask). So doing it one time costs me $32 a contract. A ToS round trip for 4 contracts is $6 at $1.50 a contract.
>
> So if I set a target profit of 20% of my $32, that is $6.40. So after commissions I have a whole 40 cents left to spend on my celebration dinner!
>
> Yet this trade follows all the rules that I have looked at - volatility, skew, front vs back prices, minimum short premium etc.
>
> I suspect I need to trade a bigger underlying, but surely that should just be reflected in a "minimum cost per contract".
>
> Does anybody have enough practice on these to have a rule they feel comfortable with?
>
> Bill
>

---

The New Busy think 9 to 5 is a cute idea. Combine multiple calendars with Hotmail. Get busy.

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