Our positions for the June cycle were like Dr. Jekyll and Mr. Hyde. In general, it was another difficult month, in terms of falling implied volatility and, in the case of our IBM trade, an uptrend culminating in a whipsaw—but we still managed to break even: hitting the target profit for our SPY position made up for our IBM loss. And even though we underperformed the market for the month, we’re still outperforming handily over the long-run.
Thursday, May 28, 2009
We’re a bit behind on Calendar Options reviews, so we’re making this one a double-header— quite apropos, as it turns out, because the story is much the same for April and May: A strong market uptrend and steadily falling implied volatility continued to work against us, but we still came through each cycle with a profit. That makes three straight months in which we’ve shown that a market-neutral income strategy using calendar spreads can work in trending markets, even when…
Monday, July 7, 2008
Last week the market continued lower despite being deeply oversold, putting one of our Calendar Options positions in adjustment territory for the second time. It’s been a wild ride for EEM: After a decline of more than $3 Wednesday, the ETF dropped another $1.50 in early trade Thursday morning, to a low of $127.92, then rallied back above $130 before retreating again with the rest of the market. IYR fared better last week. Even though the real-estate ETF fell along…
Wednesday, July 2, 2008
We talk a lot about why adjusting iron condors is rarely, if ever, a good idea, and adjustment decidedly is not a part of the Condor Options strategy. So you’re probably wondering, why all these Calendar Options posts about adjustments? The answer is simple—calendar spreads are not like iron condors. A quick review: As we explained in Part I of this series, our decision to adjust calendar spreads is based on the same criteria as our decision not to…
Tuesday, July 1, 2008
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With markets sharply down this morning, we want to extend the profit range of our EEM July/Sept calendar put spread to the down side by rolling half of our position at 140 to a put calendar spread at 130, as follows: -2 EEM Sept 140 put +2 EEM July 140 put for a net credit of $3.80; +2 EEM Sept 130 put -2 IBM July 130 put for a net debit of $4.40. Again, the two-contract…
Saturday, July 4, 2009
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