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.
Showing posts with label Diagonal Spreads- Time. Show all posts
Showing posts with label Diagonal Spreads- Time. Show all posts
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.
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