NaughtyPines
Long

OPENING: XOP JUNE 15TH 32 LONG/APRIL 20TH 35 SHORT CALL DIAGONAL

AMEX:XOP   SPDR SERIES TRUST SPDR S&P OIL & GAS EXPL & PRODTN ETF
... for a 2.49/contract debit.

Metrics:

Max Profit: $51/contract* (20.5% ROC )
Max Loss: $249/contract**

Notes: As with any diagonal, there aren't many metrics to look at. If you just leave the setup alone, however, your max loss is $249/contract, and your max profit is $51/contract. Max profit is realized with a finish above the 35 strike at expiry; max loss, with a finish below 32 and no rolls of the short call to reduce cost basis.

Another way to look at the setup is that you're paying only 2.49 for a 3.00 spread ... .

* -- Assuming no short call rolls and a finish above the 35 strike.
** -- Assuming no short call rolls and a finish below the 32 strike.
Mar 08
Trade active: Managing aggressively: rolling the April 20th 35 strike down to the April 27th 34.5 for a realized gain and a credit of .31/contract; cost basis at 2.18
Mar 21
Trade closed: target reached: Pending order filled at .05 short of max profit for the existing spread -- a 2.45 credit; .27/contract profit (10.8% ROC). Had intended to roll the ITM short call for additional credit, but couldn't catch it in time.
Nice job!
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NaughtyPines Tom1trader
@Tom1trader, I'm frankly a little glad I'm out of the setup. Although it was a directional shot diagonal, I don't generally like paying more in extrinsic in the long than I've received in credit for the short.
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Tom1trader NaughtyPines
@NaughtyPines, Agreed have been doing more calendars and doubles lately and with my setups have always come up positive Theta - have tried a couple of earnings doubles, they work if options liquid enough but tricky. Have been playing with setup parameters to see if can pin down safer trades. They are tempting as you can get far wider than the historical earnings move with a belly that is not too low and cheaply (as long as close before front expiration anyhow.
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NaughtyPines Tom1trader
@Tom1trader, My personal feeling is that they're somewhat more flexible than a "static" spread, particularly if you give yourself some time with the back month to "work it."
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NaughtyPines NaughtyPines
@NaughtyPines, Generally, I've been starting with the 30 delta for the front month and setting up the back month such that the break even (the long call strike + the debit paid) is at or below current price and where the debit paid is (ideally) <75% of the width of the spread. With a double, you do the converse with the put side, selling the front month 30 and buying a back month such that the break even is above current price ... . Occasionally, I'll go at the money with the shortie, too.
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