Buy 1  GOOG  April 28  835 Call  and Sell 1 GOOG April 21  835 Call for $10.80 Debit with price at $834.43. I just executed this order live at 1:17 pm central Chicago Time today, Monday. Why did I do this? Why would I pay 26 implied volatility for my long call and sell my short call at an 12 implied volatility?  Earnings Because Earnings is coming next week and that will keep the April 28 Expiration Options high while the April 28 Options expiring this Friday will not be affected by next weeks earnings and the Implied Volatility should stay low or go down. How does this benefit me? For this Calendar Trade, I will have very little concern that I will lose money from Volatility decreasing and thus hurting the trade. Will I still have Price Risk? Absolutely.  The Goal I paid $10.80 Debit or $1080 for this spread for every 1 contract. My goal would be to make 8-10 percent profit on my investment of $1080. So, I will have an order in immediately to sell out this Calendar for around $11.65 Credit for the rest of this week. That would be about an 8% profit on Capital used […]

As of 12:35 PM central today, SPX is 2361  +6  and VIX is 13.52  +.65. That is unusual for VIX to increase on an up day, why is it happening?  Because there is unrest in the world and people want some insurance .  With the US bombing the Syrian Air Base last week, and the bombing of the Christian Churches in Egypt, people are a bit nervous. Throw in the fact that the SPX is up about 15% since November, and you can see why folk, especially fund Managers , would want some downside insurance with the VIX, and are willing to pay up. Any Trading Opportunities?  With this Friday a Holiday for the market, I am a little lighter in trades this week. In GOOGL, here is  an pre-Earnings Calendar Play. Buy 1 April 28 Expiration  830 Call  and Sell 1  April 21 Expiration 830 Call . Total Debit $9.55 . I just bought this live at 12:59 pm central today with GOOGL trading at 827.79. Earnings will be the week of Monday April 24. The purpose of this Calendar is to put on a trade that shouldn’t have any Implied Volatility Risk. We are buying the long option […]

Just started our new 2 week online class, “The Double Barrel Calendar”, and wanted to share the class trade we put on live yesterday.  SPX was around 2370. B 1 Apr 5  2390 C and Sell 1 Mar 22 2390 C. B 1 Apr 5  2350 P and S 1 Mar 22  2350 P  .Debit of $14.05 and Margin or Risk of $1405. Join us in tomorrow’s Class as we analyze this trade and cover more on this interesting strategy that serves as an alternative to the Iron Condor when Implied Volatility levels are low, which they are now. VIX is currently at 11.74. Iron Condor The foundation of this strategy as well as an Iron Condor is the short strangle. In this trade, we are selling the 2390 C and 2350 P in the Mar 22 expiration. Unlike the Iron Condor, which will buy the long hedges in the same expiration, we buy our long hedges in the Double Barrel Calendar in a further out expiration and the same strikes as the shorts. In this trade, our longs are in the Apr 5 expiration. Implied Volatility In a  low Implied Volatility environment, this strategy gives us wider room or Breakevens than a […]

Can you do an Iron Condor when VIX is 13.5 and the SPX is 30 points away from the  all time highs? Yes, it depends on how you structure and manage the trade. This is the trade I just put on for SOM TV with SPX around $2247. Sell 1 Feb 3  2315 Call and Buy 1  Feb 3   2325 Call. Sell 1 Feb 3  2150 Put and Buy 1 Feb 3  2140 Put. Total Credit  $2.20 credit. Deltas The deltas of the short options were around 15. The goal on the trade is to make 10% and not lose more than 12% of the risk or margin of the trade, $780. If the delta of the short call or put gets to 23 this week. I will look to either buy a call on the upside or put on the downside to cut my position deltas 1/2 or 2/3. I sold the Credit Spread for $2.20 credit, if it goes to around $1.40, I would buy back the Iron Condor for $1.40 debit, making around 10% on my capital. Join us tomorrow, January 4, for a free webinar at 1 pm central titled: How to Manage a $10K Weekly […]

Most of the live Income Trades (delta neutral, positive theta, selling strategies) that students in our community and myself had on today did much better than expected, and in some cases did great. Lets discuss at least 2 of the trades I had on as examples. Trade #1 did absolutely great today, and it was a basic non-Directional trade that made 20% today with the market going drastically against us. Balanced Butterfly Trade The trade was a balanced Butterfly trade in SPX in the August 19 expiration, and the width of the Butterfly was 40.The trade was put on yesterday when SPX was around 2105.The trade was put on using all Calls. Here is the trade using a 1 contract example. Buy 1 2065  and sell 2  2105’s and Buy 1  2145. I bought some units at $5.40, $5.30, and $5.20. A unit could be 1-2-1 or 2-4-2 or 3-6-3, whatever size you are trading at. In this trade, we want the price of SPX to be near the short strike of 2105. Today at around 9:45 am central time, SPX was around $2059 and I got out of my entire trade that I bought around $5.30 and sold it for a $6.40 […]