Go to http://ExpertOptionTrading.com/videos for more free option straddle videos. Let's go to another stock. Let's go to AutoDesk. It's ADSK. We'll take a look at this. First, we're going to check the implied volatilities. We've got a 32.9 on the front month, and a 34.9 on the second month. That's a negative skew of 2%. Now, 2% is not too bad. If we do 2% or under, that's okay. This may be a good candidate. Let's take a quick look at our profit charts for ADSK. It looks like the stock had quite a downturn back here in March. It started coming back, here, and now it's rallied up to 40, from a low of 30. It's possible that this has some potential to it. It may continue to rise higher, but there's a 200-day moving average that generally either acts as support or resistance for most stocks. As you can see, it was support, when it was back here in mid-November. Now, it's traded through that. That could be resistance up here. Let's take a look at their options. Now, we have a little bit better strike price differential, here. We've got 2.5 points between the strikes, that we can play with. Let's go ahead and delete this Monster trade, here, and go to June 42.5. We're going to go ahead and buy a double diagonal, double calendar. We're going to change the puts. Let's change the puts to the 40 puts, and then go ahead and "Analyze duplicate trade," here. That doesn't look too bad, actually. Our actual live price is just below the center of this. Let's see if we can't play a little bit more with the strike prices. We'll go to the next lower calls, which is the 40 calls. Let's go down to the next lower puts, which is the 37.5 puts. Now, we're too far over to the right. We can't seem to get this exactly in the center. Let's go back to our "Trade" tab. We're trading right at 40 now. Let's see if we can't get a calendar, at least at the 40 strike price. That doesn't look too bad at all. What we've got here is a calendar. The symbol is ADSK. We are looking at the June 40 calls. We are right clicking on those. We are going to buy a calendar, at the 40 strike price. We are analyzing it as a duplicate trade. It doesn't look too bad. Now, all you have to do, is determine exactly how many contracts you want to do. In addition, you want to take a look at your breakeven points, here. We want to get as much in the center as possible. I believe, based on the current state of the market - I think we're going to drop down a little bit, in the market. This stock may fall, or it may not. Our breakevens on this are these red lines here. It looks like we have a breakeven on the left side of 38, and we have a breakeven a little higher than 42, on the right. If we go back to our profit charts again, 38 is down here, where prior support was for this group of trading days, in here. 42.25 on the up-side is our breakeven, and that is right around where the current resistance of this 200-day moving average is. This looks like a very good trade. Now, all you have to determine is how many contracts you actually want to do. Let's go back to the Analyze tab. I'm just going to bump this up a little bit, to 5 contracts. Our maximum profit on this is going to be approximately $400, at expiration of the June contracts. We're going to add this to our portfolio. It looks like we've got a nice range to move in. We've got a peak profit, here. We may have to adjust this later, which will give us an opportunity for additional profits. However, at this time, let's put on this, get this started as a trade in our portfolio, and let's start collecting some Theta, here. Our debit is 65 cents, as you can see. That's the most that we can lose in this trade. When you're doing a calendar spread like this, whatever your debit is, is your maximum loss. You can't lose any more than 65 cents in this trade. The margin requirement for this trade, with 5 contracts, is only $325. It gives us an opportunity to really diversify our portfolio, a little bit. For more option straddle video 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
Visibility: 781
Duration: 8m 37s
Rating: 4