Anthony,
Don't get me wrong, but getting into a trade just because it is cheap is not a good reason. Calendar's are a different kind of a beast as they are non-linear.
You are expecting the time decay in the front month to be more than the back month. That's not going to happen until after August expiry plus there is not much room to drop without effecting the back month too. And it has a good chance to move out of the range.
In any case, good luck with your experimentation. Keep us updated how it turns out.
VK
From: Anthony Hills <brem1h@yahoo.
To: ConservativeOptionS
Sent: Sun, August 1, 2010 8:37:52 AM
Subject: [ConservativeOption
| I sold the sep 70 so that I would have very little investment (49c) in the trade. I would have preferred a fatter premium AUG sold call but TM is not a very volatile stock so it does not command much premium. I just noticed that the OCT was cheap compared to the SEP so I thought I would give it a try. A gunslinging approach rather than heavy research. I try to learn by experimentation. ____________ Anthony Hills Hills Motors/Hills Industries 4011 Pacific Blvd San Mateo,CA 94403. 650 573 7425 Fax 650 573 8721 |
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