Calendar Option Spread - Option Trading Strategies Video 31 part 5



Go to http://ExpertOptionTrading.com/videos for more free videos on Calendar Option Spread You can sell an in the money put, and you can buy out of the money puts in a distant month. Same thing. It's the same way that you did the calls. You can do it with puts as well. If you're bearish on stocks, you can do the exact same thing here, and just trade these so that it's very favorable. If you're wrong, they go up and make money, and if they go down, you can make unlimited money. There are lots of ways that you can play this. Let me put that back together in a portfolio view for you. You can see that if the market goes down, I make money, and if the market goes up, I make money. If it stays the same, I lose a little bit of money. But I have so many different trades going on at this one time, that if I lose $50 or $60 on one, but I make $300 or $400 on another, that's not too bad. If we take a look at the price slices here, you can see that I'm actually making money today, about $60. If it goes up, I make a lot of money. If it goes down, I make money. It doesn't matter. Either way, I make money. Let me talk about the risks, before we leave here, and we close this out for the day. The risk is that I've sold this Yahoo 17.50 call. If I get assigned on that, what I'll do is take those 100 shares that they're going to assign me - I will have to buy, or I will be short 100 shares of Yahoo stock, because I sold that call. I have those three October calls to protect me from any upside potential. In fact, I have unlimited upside potential on this trade. What I will do, is I will go ahead and buy those back, into the market. I will go ahead and roll that trade up into the August 17.50, or maybe even the $20 calls. I will sell another call into August, and keep my October calls. That's my exit plan. Let's say nothing happens between now and the 16 days left in the July option. If nothing happens as we get closer to this July expiration, if I don't really want to be assigned on that short call that I have, I'll simply roll it up into the August 17.50s. It's going to cost me another 30 cents, but you know what? That's not a big deal. I've eliminated some of my risk. Maybe I'll actually make a little bit of money on that, and roll it up for even money, to the August 17.50. I still have my Octobers out here, waiting to be profitable, if somebody makes an offer for Yahoo at $30 or higher. I still have my limited downside risk, because I have shorted that one in the money call against the three that I bought out in October. So, that's the plan. That's the exit plan. The plan is to hold these out. I will sell the near-term in the money call, if I'm looking for an upside pop on a stock. If it doesn't happen within the next week - I would say 7 to 10 days before expiration, when that number goes down to 7, when there are 7 days left until the July expiration, I will want to roll those up to the August 17.50s and sell one of those. I will hold it in there until the 3rd week of August. If nothing happens by the 3rd week of August, I could potentially roll it up again into the October 17.50 calls, if I still think there's some potential in this trade. If not, I'll just close the whole thing out, probably for even money. I could even make a little bit of money. It's such a low-risk trade that it doesn't matter. For more videos on Calendar Option Spread be sure to check out our channel: http://www.youtube.com/user/howtotradeoptions To learn more about the Expert Option Trading course go to: http://ExpertOptionTrading.com Additional Tags ================ vertical spreads, options greeks, what is options trading, option volatility, option spreads, options volatility, how to trade in options, option strategies, index options, equity options, virtual trading, options spreads, virtual options trading, options trading tutorial, option trading strategy, options trading course, how to trade stock options, options trading systems, options training, learning options, learn to trade options, option trading tutorial, options trading strategy, option trading course, option trading systems, options trading basics, option trading basics, option trading system, options trading courses, options trading training, trade options, what is a stock option, options strategies

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    Duration: 10m 31s

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