options educaiton

AAPL Setting Up For Excellent Calendar Spread

Submitted by msebastian on Fri, 09/21/2012 - 2:59pm

What makes a successful calendar spread?  It's actually pretty easy to figure out:

1.  Buying low overall Implied Volatility

2.  The right spread between months

In other words,  being able to buy the back month option for a cheap price and then, relative to the back month option, being able to sell the front month option for an expensive price.  Here are a few things that don't matter:

1.  The time frame of the trade

2.  The Theta (if you are using spreads as a theta play and not trading the vols, you will lose)

3.  What months are bought and sold

Calendar spreads can pop up in odd places in some of the most active names.  For instance, take a look at December IV vs Jan IV in AAPL:

GLD IV at a 104 Week Low, Precious Metals Getting Smacked

Submitted by msebastian on Tue, 07/05/2011 - 5:28pm

While many traders are talking about the low VIX (in IV terms yes, in HV terms debatable), under the radar is a different type of volatility sell off, commodities and precious metals.

SPX Up, VIX Up, Volatility Continues Trend Higher

Submitted by msebastian on Fri, 05/06/2011 - 8:11pm

When I asked on Wednesday if the VIX had topped out, the market responded with a resounding "NO!"  Since Wednesday, we have seen

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