How to view the entire chart:
1. Try clicking on the name of the most recent article in the column on the right. This will remove the "Archives" list.
2. Try right click on the chart itself and open it on a separate window.
I am sorry that I cannot always make the chart small enough to fit neatly on the left column. I want you to be able to see the details I want to point out.
I Hope this helps,
Juan
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I described how I entered this position in a previour article. Check it how here:
http://stockoftheday.blogspot.com/2006/06/new-pccrc-based-on-skew.html
Here is the position as originally entered:
Here is the confirmation of the closing orders as calendar ratio spreads (calls and puts)
Here is the result in Platinum
The file has been saved in the shared folder in my Platinum account, which is downloadable. If you'd like to have access to my share folder, follow the instructions in my previous article. Here is the HRL:
http://stockoftheday.blogspot.com/2006/07/current-and-archived-trades.html
4 comments:
Well done Juan.
Yes, fortitude, I think I am begining to see this as a method that would work under many market conditions.
First, the high fliers that kept going up, and up. Making Delta gains.
Second, the high IV skews which have shown they can make us money even when the market is pulling back.
As long as we hold the rules, time does the rest.
This is a low stress, low risk and reasonable profits kind of trade.
I have noticed that you will sell 10 of something then buy 20.
I would think it would be more benificial to buy and sell the same amount. What am I missing here?
Thanks
Mike
Mike, I beging my trades as what Lawrence McMillan calls a CALENDAR STRADDLE. My phylosophy with this trade is that I am very hedged, and I can make money with Vega, Delta and Theta. If I was to enter the same number of contracts in each leg, I would have a calendar Iron Condor, which benefits from Theta and Vega. In such cases, DELTA is the risk.
You have seen trades that I have exited shortly after entering them (just a couple of weeks). BUT I could stay in a trade for months. In months a stock can decline or rally strongly, in which case I would win with DELTA. Until the big jump occurs, I collect Theta gains, thus reducing my debit, or close a position altogether, if the my long options have a volatility spike.
With my trade, I make money unforseable ways. I use the metaphore of a carriage pulled by three horses called Delta, Vega and Theta. When one weakends, the other pick up the slack. Take a look at other trades in this series. I recall a LRCX, a DNA, an AAPL trade and a GOOG were Vega played less of a role than Delta, but it did take more time to ring the profits.
If you want to play the Iron Condors, be sure to expect a decline in IV, because you will be selling near the money, front month options and buying OTM 2nd month options. That is a limited approach in my mind.
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