On 10/2/08, I entered as follows:
AIG- Bought Jan '10 10 leap calls & sold Oct 5 calls against them for total debit of $0.64.
C- Bought Jan '10 30 leap calls & sold Oct 22.5 calls against them for total debit of $0.85.
Today I rolled my October shorts to November to lock in profits.
AIG- I rolled Oct 5 call to Nov 6 call for a credit of $1.06.
C- I rolled Oct 22.5 call to Nov 22.5 call for a credit of $2.89.
So my new cost basis is:
AIG- $0.64 debit + 1.06 credit = $1.70
C- $0.85 debit + $2.89= $2.04
So now these are both free trades as I have made more than my original costs.
Thursday, October 2, 2008
Time Diagonals- AIG, C, SPX
Just wanted to jot down some of the latest trades I got into this week.
I am doing several time diagonals to create monthly income and also hedge in the middle of the market volatility with the bailout. My fellow trade team members are also doing these from www.insanemoney.com.
These are called "time diagonals" as you are buying leaps with longer time than the normal diagonals that only go out 3-4 months. These are great for now as stocks are cheap with the market downfall and you hedge yourself with lots of time in case the trend changes on you. By this time you are already in a free trade because you have brought in credits from each roll each month essentially lowering your cost basis.
AIG- Bought Jan '10 10 leap calls & sold Oct 5 calls against them for total debit of $0.64.
C- Bought Jan '10 30 leap calls & sold Oct 22.5 calls against them for total debit of $0.85. Today I am rolling my Oct short calls to the Nov 22.5 calls for a credit of $0.70 so now my cost basis is $0.15. So with one more roll to Dec I will be risk free on a "free trade" as I have paid off my cost basis with incoming credits from my rolls (as explained above).
SPX- Bought Jan'09 1250 Calls & sold Oct 1200 calls against them for total debit of $15.30.
I am doing several time diagonals to create monthly income and also hedge in the middle of the market volatility with the bailout. My fellow trade team members are also doing these from www.insanemoney.com.
These are called "time diagonals" as you are buying leaps with longer time than the normal diagonals that only go out 3-4 months. These are great for now as stocks are cheap with the market downfall and you hedge yourself with lots of time in case the trend changes on you. By this time you are already in a free trade because you have brought in credits from each roll each month essentially lowering your cost basis.
AIG- Bought Jan '10 10 leap calls & sold Oct 5 calls against them for total debit of $0.64.
C- Bought Jan '10 30 leap calls & sold Oct 22.5 calls against them for total debit of $0.85. Today I am rolling my Oct short calls to the Nov 22.5 calls for a credit of $0.70 so now my cost basis is $0.15. So with one more roll to Dec I will be risk free on a "free trade" as I have paid off my cost basis with incoming credits from my rolls (as explained above).
SPX- Bought Jan'09 1250 Calls & sold Oct 1200 calls against them for total debit of $15.30.
Bear Call Spreads (BRCS)- AMX, CHL & EEM
Here are some bear call spreads I'm looking at for this week that I brought up in last night's meeting. I'm expecting to be in and out of all 3 of these brcs so I am setting limit orders to GTC for 80% of the credit. BTW, I am having trouble attaching my charts to this post so my AMX chart is missing below (not sure what's going on with that)...
AMX- Oct 50/55- currently at $0.92 but I will place an order at around $0.97-1.00 to capture some more premium with the news on the bailout. (the final vote in the House of Rep. is set for tomorrow). From the chart, I see the downward channel it has been in since April. The volatility on the options chain is very high with the front month near 73.45%. The last 2 days have retraced up so that's why the premium is in the $0.90 cent range. I like the resistance level at 50 so it gives me a little cushion.
CHL- Oct 55/60- similar chart to AMX with a downward channel and the last 2 days bullish (for higher premium on the calls). The volatility on the options chain is very high with the front month near 77.53%. The current credit is $0.85, but I'll place my order at $0.95 and watch it today.
EEM- Oct 38/40 (this one's my favorite because I like $2- $2.50 strikes
The chart is like deja-vous to the other two. The volatility on the options chain is very high with the front month near 79.56%. So you can get $0.35 on a 1.65 risk! WOOHOO!
AMX- Oct 50/55- currently at $0.92 but I will place an order at around $0.97-1.00 to capture some more premium with the news on the bailout. (the final vote in the House of Rep. is set for tomorrow). From the chart, I see the downward channel it has been in since April. The volatility on the options chain is very high with the front month near 73.45%. The last 2 days have retraced up so that's why the premium is in the $0.90 cent range. I like the resistance level at 50 so it gives me a little cushion.
CHL- Oct 55/60- similar chart to AMX with a downward channel and the last 2 days bullish (for higher premium on the calls). The volatility on the options chain is very high with the front month near 77.53%. The current credit is $0.85, but I'll place my order at $0.95 and watch it today.
EEM- Oct 38/40 (this one's my favorite because I like $2- $2.50 strikes
The chart is like deja-vous to the other two. The volatility on the options chain is very high with the front month near 79.56%. So you can get $0.35 on a 1.65 risk! WOOHOO!
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