Mikael

i found this, not sure if it really works but maybe worth a try? http://indexoptionstrading.alliancemtg.com/how-to-hammer-spx-orders-home/

so i'm looking at it this way (assuming you buy at ask and sell at bid, to ensure you can 100% get out of a position) SPX sept quarterly 1650 put about 3 dollar spread on 30 dollar option (so slippage is 10%) 10 contracts is about 10 x 1.5 x 2 = 30 dollars in commission (SPX contracts has higher commissions 1.5 usually on IB) slippage cost is 10% of 30k, which is 3000 dollars + 30 dollars in commission = - 3030$ over all SPY sept quarterly 165 put about 3 cent spread on a 2.9 dollar option (so slippage is about 1%) 100 contracts is about 100 x 0.65 x 2 = 130 dollars in commission slippage cost is 1% of 30k, which is 300 dollars + 130 dollars in commission = - 430$ over all i think it's better to trade on the SPY even though you need to do more contracts...

I think for calendar spreads SPY might be a better choice than the SPX because of the bid-ask spread. i have a spx calendar on but it was hard getting filled at the mid for further out months. although you end up paying more in commissions since you need more contracts to get to the same value.

I think for calendars adjustment are definitely necessary but in my experience (and also talking to friends who are pro traders) keeping things simple is also important. for instance, i never open double calendars at the outset. why do that? i'm neutral anyway so i will open a single calendar to give myself a chance at higher profits, and when (and if) it gets to my adjustment point (for me it's BE at expiration), i will just open another calendar. if the moves again, i'll completely close one calendar and open a new one at the new BE point. i never have triple calendars open. why pay more commissions to your broker? sometimes it's better just to stick to a simple system and let the trade breathe a little bit before adjusting. just my 2cent. *just note adjustment we are talking about is for price movement only, please make sure you understand the volatility risk you have with calendar positions.

Hello, my GTC sell order was filled today for the NFLX calender. I made no adjustments because my adjustment point was never reached. entry debit: 4.40 exit credit: 4.95 12.5% profit before commissions profit target was reached 9 days before short expiration

anyone taking off the short before the FOMC minutes get released?

Hello, here's what happened with my trade: I opened a single 260 put calendar (sep/aug 5) on the 14th for 4.40 debit. BE @ expiration on the 31st of Aug is 245 and 275. I was actually up on the trade until the big rally today. Now it's 4.59 debit to close and the stock is trading right below my adjustment point of 275 (273.29). my plan is to add another calendar at the 275 strike if NFLX trades past 274 tomorrow. my plan hasn't changed from the entry point. i will continue to adjust at my BE points as soon as they are reached. IV is still at the lower end of the range and the trade will continue to benefit from any increases in IV. the next adjustment will depend on which BE point is breached. but instead of opening a triple calendar, i will simply sell the unthreatened calendar and open a new calendar at the threatened BE point.

in hindsight if i was to enter the trade now i would use a longer dated back month. probably oct. rationale: IV was at a 2 year low, there's no harm in taking more IV risk since it's not likely the IV will drop further before going up. (vega of your calendar positions increases as the time difference between your short and long position increase).

I agree with Paul's trade analysis. My approach was a little different. I started with a single calendar with a half allocation. If the stock moves to one of my break even points, i will add another calendar at the closest strike. so instead of starting off with a double i start with a single. that's the only difference. adjustments afterwards will use the same approach as Paul's. And that video on tradeking is excellent.

Also, it's pretty unlikely that someone long the call you sold would exercise early, because there's no advantage for them. why would they do that? they are going to lose all the time premium they already paid you for. so they would almost always want to sell to close their position hence collecting intrinsic and extrinsic value on their option. On the other hand, if you sold someone a PUT. they may exercise early on you. ESP if it's really DITM and there's very little time value left. Ask yourself, would you rather get cold hard cash TODAY or in 2 WEEKS if the time value is very small. I'd rather get cash today earn interest on it, than wait 2 more weeks to collect 10 cents in time value. Especially if they bought a covered put and was planning on getting rid of the stock already. make sense?

Paul if you sell a call and it's DITM going to ex-dividend you will certainly get assigned every time. Because the option premium is adjusted so it's much lower than actually receiving the dividend. because everyone knows the stock will drop in price by the dividend amount. and DITM options have very little time value in them. so in this case the extrinsic value < dividend amount. you will always be assigned. all you do is pay your broker commissions. think about it, the market makers will not allow people to a) buy a bunch of stock then sell a bunch of DITM calls c) collect the dividend AND time premium for selling then everyone will be doing this and we'd be all rich!

Yeah the risk is the margin risk. so assuming you can't come up with the money and you need to either borrow it from your broker and pay interest or somebody who's willing to do a short term loan. Also you are at the risk that the stock is going to move before monday. well the NFLX example i gave was you are short the 260 call. and the stock rises to 270. then he is going to exercise his call (which he bought from you) for $10 profit. but then YOU have to go and BUY the stock at the market price which is now 270 and sell it to him at 260. You'd think most people who own a long call would just sell to close their position but you NEVER KNOW what people will do. He could be thinking, well i want the stock so i'm going to exercise my option. he/she might not even think about the remaining time value. OR on the put side, they may exercise so they can GET CASH since they own the stock, even though it doesn't make sense but they can still do it! but whatever you do DON'T EXERCISE YOUR LONGER DATED LONG CALL OPTION (we are talking about a CALL CALENDAR here), i had seen people do this before because they got scared because now they have an obligation to sell shares to someone but they don't own ANY of the shares, and they automatically exercise their longer dated option so they can BUY the shares at the SAME price they sold it for (because they don't want to take a temporary loss since the stock went up). If you think about it, this is STUPID because you just exercised a call which you paid TIME PREMIUM FOR, why would you do that? it's much better just to SELL YOUR LONG CALL, that way you don't lose your time premium. AND THEN USE CASH (OR MARGIN MONEY) TO BUY SHARES for Put calendars, let's say you get assigned shares. DON'T EXERCISE YOUR LONG PUT EITHER, YOU CAN JUST SELL THE SHARES AT MARKET PRICE (get cash). AND JUST SELL YOUR PUT SEPARATELY SO YOU DON'T LOSE THE TIME VALUE (get cash gain). so pretend you own a 260 NFLX long put expiring in a month. and you are short a 260 NFLX put expiring in 2 days. and all of a sudden NFLX drops to 250 and you get assigned shares at 260. So some people panick and is thinking, oh no i got assigned shares at 260 but now the stock is 250, i'm down $10 a share, i should just exercise my long PUT and sell it to someone else so i can break even. WELL THINK ABOUT IT, WHY WOULD YOU TRY TO BREAK EVEN WHEN YOU CAN MAKE A PROFIT? THE CORRECT THING TO DO IS JUST SELL THE SHARES AT MARKET PRICE, 250. THEN SELL YOUR LONG PUT SO YOU WON'T LOSE TIME VALUE ON IT WHICH YOU ALREADY PAID FOR.

Also if you are doing a CALL calendar, and you are short a call on a stock that's about go ex-Dividend, you got to watch it very closely or just close your position. because let's say NFLX is paying a $5/share dividend on tuesday. and i have the 260 call calendar. then all of a sudden, the stock rises to 270. and the person you sold your call (who also happen to have tons of cash in their account) might exercise the call so they can own the stock and collect the dividend.

Another tip. For any time spread (calendars. Diagonals) Make sure you buy back your short position before it expires. For put calendars because the short might be ITM and you get excerised on then you have to buy your counterparty's stock. But your long position is further out and since trading stopped you can't cash out. Your broker is going to go nuts since you won't have enough money in your account so you have to borrow money from them at margin interest (which can be pretty high so check what's the margin interest they are charging). Ontop of that stock can move before Monday during the weekend and you might cash out a lot less than you thought. If it is confusing think like this. Expiration friday comes, you are thinking oh well i'm just going to let my short option expire so i can keep that 5 or 10 cents of time value remaining and just pay the intrinsic on it. well now your short put option is ITM, counter-party is going to exercise his right to sell you his stock. then your thinking well i have enough money to buy the stock anyway, so i'll just get assigned and sell it monday. well what if on Sunday, some news come out and NFLX just happened to be faking the subscriber numbers. guess what the stop opens 100 dollars lower on Monday. the good thing is at least you have a longer dated long put option that you can exercise and sell your stock to some poor soul, but if you didn't have that long position on you'd be screwed. Also don't assume your broker is just going to sell your stock on Monday automatically, especially if you had enough money in your account to buy the stock outright. ALSO you can be exercised on anytime with american style options, so this would apply to any equity option if you are short a contract. for instance i have the 260 put calendar. well i'm short NFLX at 260, now the stock moves to 250 (which actually happened on thursday), so guess what, guy decide to exercise his right to sell me his stock for 260 (normally people won't do this because they still have time value left and plus they can just sell to close their position, but you never know what they other guy is thinking or he just might want CASH NOW because he wants to buy a Ferrari, so who knows but he has the right to exercise his option at any time he wants). now i'm screwed because i have to buy 100 shares at 260 (and i'm short 10 contracts) so i have to buy 1000 shares of NFLX from him at 260, that's 260k i have to come up with. obviously you can exercise your long put and sell your stock to some other dude, and everything comes out to be a wash but it's still a big risk. Then you need to pay the exercise fee and assignment fees etc. and it's alot of trouble and your broker is going to call you so you have to deal with them as well. so it's just a big hassle. so don't be cheap and try not to pay the 5 to 10 cents to close your short because you never know what can happen over the weekend.

Chris I wanted to ask you. Was that Icahn AAPL tweet legal? Don't the SEC have something against stock manipulation...

i got killed on the short (i forgot to roll out 2 wks so i still had the 171 put expiring today ) rolled 171 short put to 167 short put this morning for 2.62 debit...

I hope Icahn doesn't tweet about NFLX LOL

NFLX decided to cooperate and go back up to 259 so no adjustment needed

btw for the NFLX calendar, i'm very close to BE point at expiration so i will adjust tomorrow if the stock continues to dive. I will be adding another calendar to the strike closest to the BE point, which is the 250 strike. even though the stock moved quite a bit and the calendar has only been open 1 day, the +IV offset some of the loss so it's actually only about 1.4% down right now. looks like the 250 calendar costs about 4.25 debit right now, but will check the cost tomorrow. so this will essentially double my allocation. (original calendar was 4.40 debit)

Paul the reason i mentioned livevol is because i was recently tipped off by another member: http://www.livevolsecurities.com/stock-options-trading-pricing Pros: - 0.65 per contract, no ticket fee - IB execution/fills - Awesome platform (check out the livevol X video) Cons: - need to fund with at least 35k USD - backtesting tool not as good as ToS

Pretty much. I'm too scared to sell strangles on a stock like NFLX. IV is actually at a 2 year low right now so I couldn't resist opening another calendar. I did a single ATM calendar aug 5 / sept

Kim you are just adding each spread to the simulated trade section under the analyze tab right?

also there is a IV skew edge on aug/sept. the IV is higher for the 280 strike onwards aug 4 call than the sept calls right now.

IV30 is at around 36. I feel like a calendar will be a good play right about now.

I agree