Short term
Trade view / 30 September 2016 at 14:44 GMT

UPDATE: Adjusting SPY calendar spread

Product Manager, Options Trader, Educator
Instrument: US500.I
Price target:
Market price:
On September 20, we initiated a four-week wide calendar spread on the S&P 500 (SPY ETF) and paid a premium of $1.30.

Today marks the expiration of the short 217 call and we are going to roll (buy back 217 call for $0.04 and sell 5 OCT 217 Call for $0.54). This produces a net credit (money going into our account) of $0.50. 

The credit of $0.50 helps us reduce our cost basis and limit the risk in the calendar down to $0.80. We will update next Friday on the next adjustment. 
SPY Calendar

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Source: Saxo Bank 

— Edited by Michael McKenna

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Feders Feders
Hello Georgio, is it possible to leave the short call expire in order to avoid to pay the fees?
Feders Feders
I think it will expire worthless
Georgio Stoev Georgio Stoev
We are rolling, so we buy to close and sell to open. If you think that the options will expire worthless make sure that another short call doesn't add up to your margin.
AlexF AlexF
Hi Georgio one question on the covered short call strategy do I need to do anything if it expires worthless ?
LucaF LucaF
Hi Georgio, when I saw the SPY going up this afternoon I decided to wait a little bit, so I paid more to buy back the 30 Sep (20 $) but in turn I got more from selling the next week one (82$). Net net I got a few bucks more... Was it a good idea or just luck? What might have gone wrong instead? (It is an academical question due to the small amounts, but I want to learn) Thanks
Georgio Stoev Georgio Stoev
The closer we are to our strike at expiration, the more profitable the trade. The position is hedged long and short same strike , so not much can go wrong here- it's defined risk the most we can lose is what we paid for this long calendar. Have a good weekend
Georgio Stoev Georgio Stoev
AlexF, no you don't have to do anything with an option that is out of the money. However, our strategy is to roll out for another week for additional credit. Today
Patto Patto
Georgio. Are you and fxtime one and the same person ?


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