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Calendar Options: July Monthly Review

Tags: Bonus Trades, Calendar Options, Calendar Spread, Monthly Review
22 Jul 10:59pm
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In another month of fast-moving, trending price action—one of the two worst scenarios for the Calendar Options strategy (the other being a plunge in implied volatility)—we were able to come away with only a small average loss. We played it cautiously from the beginning, expecting the resumption of the bear market to keep price volatility high throughout the cycle. Consequently, we entered just two trades for July. We had to make one adjustment by the time July rolled around, but both of our po...
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Rally Stalling Out

Tags: Market commentary, adx, cnbc, nyse, put/call, tick, trin, volume
22 Jul 2:38pm
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The short-term bottom that formed on July 17 and the rally the following day were marked by incredible volume and by a convincing breadth reversal.  Since then, volume has trailed off quite a bit (as you would expect).  More importantly, even though the indexes have rallied up this morning off of their premarket lows, breadth has turned quiet negative, and the $TRIN, $TICK, and put/call readings are all flat-to-uninspiring. We suppose the key question here is whether the markets will work off ...
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July Monthly Review

Tags: Iron Condor, Monthly Review, bep, indu, leverage, new york, risk, rut, sec, spx, VIX, wall-e
20 Jul 3:14pm
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The theme for July was most certainly risk management.  The broad-based decline this summer has been quite breathtaking to watch, especially as all of the technical and sentiment-based indicators that we follow moved from oversold status to extremely oversold status to something like doubleplusungood.  Our attitude throughout late June and early July was that the unending litany of bad news deserved to be taken seriously, and that waiting around for the “inevitable bounce” and R...
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A Better Way to Play With Materials (XLB)

Tags: Bonus Trades, Volatility, barrons, calendar, calls, diagonal, implied volatility, puts, striking price, theta, vega, xlb
14 Jul 2:52am
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The Striking Price column in this weekend’s Barron’s features John Marshall from Goldman, who suggests an “opportunity to buy volatility” in the S&P Materials sector via the tracking ETF (XLB).  He makes the bearish case for XLB, arguing: 1) that the materials sector is particularly vulnerable to any slowdown in global growth, 2) that the ETF components include some less resilient names, and don’t feature the best of breed like POT and MOS, and 3) that hedge f...
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Calendar Options Close Trade Alert: EEM July/Sept Calendar Bonus Trade

Tags: Bonus Trades, Calendar Options, Calendar Spread
11 Jul 7:06pm
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We were hoping again this month that we’d be able to roll out the short options in our EEM calendar spread instead of closing the position entirely. But between the sour mood on Wall Street, a lot of economic data coming out next week, and second-quarter earnings announcements picking up, trading is likely to be even more volatile than in a “normal” expiration week. Bearing in mind that good risk management is essential, we’re closing our entire position, as follows: Da...
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Condor Options is an options trading newsletter service designed to help you generate consistent 10% monthly returns with just 10 minutes a week. We focus on the same strategy that professional options traders use every day: iron condors.

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