Trading Calendars
- Thread starter M12
- Start date
There are many ways and places to learn.
Firstly, right here at Aeromir, there are many past meetings that covered calendars, just search for them, you might need to go with a gold membership to view the older meetings. Or on YouTube you can probably find many Aeromir videos related to calendar trading. Plus, Himanshu (deemed the calendar king a number of years back) runs an Aeromir trading group that meets weekly that does cover calendars.
Additionally, I believe that Dan Sheridan is a great place to learn. I just checked, they are offering a number of different calendar related courses, for reasonable cost. Either just pick one, or give him a call and ask him what he thinks is best, he will surely tell you. Or you can do the online chat with his nephew Johnny, he will guide you along.
With the advent of weeklies, and now daily expirations, Calendars are tradable in all environments. Just have a trading plan, keep your losses under control, don't over adjust and do them consistently in accordance with your plan, mastering the craft as you go along.
DaveN
Member
Adding to the very good points that @JerseyJIm has made: If you have OptionsNET Explorer (ONE) or OptionsVue, I'd recommend lots of backtesting to get a sense/feel for how Calendars trade. (Consider even the trial periods to run through tests for getting a sense of this.) Calendars are different if you've become used to trading "vertically" instead of "horizontally" meaning Verticals or Butterflies in a single Expiration versus a horizontal spread across Expirations. The Calendars' Expiration line on the Risk Graph will move around during a trade. It tends to sink and rise which can be a bit disconcerting while in a trade, until you understand and get used to it.
Whether you are looking at Skinny Cals (3 day horizontal spreads or less), Regular, or Monthly "fat" Cals, keep in perspective what's happening at the individual strikes, both the short in front and the long in back. Ideally, assuming you'd be BUYing Calendars, you'd like your front strike short to release Premium while your back strike long hangs on to as much Premium as possible.
Lately, binary events such as the monthly CPI reports can really distort Calendars. Think about how the short and long strikes either both in front, straddling, or behind the CPI event will behave, or "should" behave.
Whether you are looking at Skinny Cals (3 day horizontal spreads or less), Regular, or Monthly "fat" Cals, keep in perspective what's happening at the individual strikes, both the short in front and the long in back. Ideally, assuming you'd be BUYing Calendars, you'd like your front strike short to release Premium while your back strike long hangs on to as much Premium as possible.
Lately, binary events such as the monthly CPI reports can really distort Calendars. Think about how the short and long strikes either both in front, straddling, or behind the CPI event will behave, or "should" behave.
M12,
Once you have done a bit of Video watching ..you can try to "forward test**" few on TOS***, but with Calendars try to break the trade in smaller parts* (take note of the entry volatility,price,and other greeks for the individual option used and follow the trade evolution carefully till expire...
Try various strikes and expiry dates ..After a while you will learned how the trades evolve over time etc...
There is a bit of hard work ..but this way you will be able to see the forces at work first hand ..and don't have to "trust" the mentor understanding of the trade.....
Happy Trading!
Calendar =Short 1 CALL/PUT at 4000 EXPIRY 7DAYS ,LONG 1 CALL/PUT at 4000 14DAYS .
** Paper trading
***If you are not on TOS try this
optionstrat.com
Buid a calendar using optionstrat
optionstrat.com
Once you have done a bit of Video watching ..you can try to "forward test**" few on TOS***, but with Calendars try to break the trade in smaller parts* (take note of the entry volatility,price,and other greeks for the individual option used and follow the trade evolution carefully till expire...
Try various strikes and expiry dates ..After a while you will learned how the trades evolve over time etc...
There is a bit of hard work ..but this way you will be able to see the forces at work first hand ..and don't have to "trust" the mentor understanding of the trade.....
Happy Trading!
Calendar =Short 1 CALL/PUT at 4000 EXPIRY 7DAYS ,LONG 1 CALL/PUT at 4000 14DAYS .
** Paper trading
***If you are not on TOS try this
OptionStrat | The Option Trader's Toolkit
Trade smarter with the best visualization and analysis tools available. Build strategies, optimize ideas, and view unusual options activity.
optionstrat.com
Buid a calendar using optionstrat
Calendar Call Spread | OptionStrat Options Profit Calculator
Calculate potential profit, max loss, chance of profit, and more for calendar call spread options and over 50 more strategies.
optionstrat.com
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I am beginning to dip my toe into some short term Calendars on SPX. Only starting to trade this week, based on what I observe on what works for past year. I am holding for one trading day and exiting with 1 DTE remaining. The reason for not trading it on last day is that the last day has lost favor since Nov of last year (I suspect that is due to the huge increase in 0DTE trading, so this avoids that interval). -- I find that taking a direction provides better average returns. Since the Wining return and Loosing returns are not symmetrical (loss is limited at -100%) -- Cannon-launch simplicity seems fine for those with the stomach for a few losses. Am doing double calendars with one ATM and other based on direction expectation. -- I lean into the asymmetric gain/loss as a primary basis for this working! (Adding stop losses are not appropriate for this (my) trade)
Wayne has a service where he does daily calendars but he has some kind of proprietary system that tells him how much to risk on the trade and what is the appropriate profit target and stop loss
So the short strike is at 2 DTE ? What is the long strike DTE ?
Long is 7 more days, so is same day of week, but following week!
DaveN
Member
@garyw, this will be a very interesting a likely profitable, and even sometimes confounding undertaking. The 7-day wide Calendars are nice, as they are always 7-days wide. Anything shorter has a weekend bump in the road causing you to put on a wider Calendar or skip on those days.
It should be interesting and instructive to watch the front and back strikes independently in the context of the market on any given day. With binary news events, e.g. CPI, those one or two days leading up can mean your front strike decays quickly and almost magically (mine have these last few days) while the back strike continues strong and holding lots of Premium.
Other times both the front and back strikes have Premium released unequally and the Calendar might seem to sink. Those are the learning opportunities. Understanding why can be really helpful in your trading. For me, that has made a lot of difference. Sometimes I entered when the two strikes were out of a normal relationship, and the market was simply settling back into it's usual relationship. Other times, I've seen the back strike get deflated without a reason I could determine, other than trading volume or Open Interest was light or taken away. Those tend to correct, but sometimes I've exited before that happens.
All of these have been good learnings that have helped my entries as well as persistence in a trade.
It should be interesting and instructive to watch the front and back strikes independently in the context of the market on any given day. With binary news events, e.g. CPI, those one or two days leading up can mean your front strike decays quickly and almost magically (mine have these last few days) while the back strike continues strong and holding lots of Premium.
Other times both the front and back strikes have Premium released unequally and the Calendar might seem to sink. Those are the learning opportunities. Understanding why can be really helpful in your trading. For me, that has made a lot of difference. Sometimes I entered when the two strikes were out of a normal relationship, and the market was simply settling back into it's usual relationship. Other times, I've seen the back strike get deflated without a reason I could determine, other than trading volume or Open Interest was light or taken away. Those tend to correct, but sometimes I've exited before that happens.
All of these have been good learnings that have helped my entries as well as persistence in a trade.
For the near (foreseeable?) future, I don't plan to mix Day of Week in time spreads terms (if front is Monday, back is also Monday, etc.) I have found (for my very short term trades) I trade direction as well as backwardation. Even with crappy direction reliability (between 50-58% recently), the results are greatly improved from non-directional strike selection. It is a goal with these trades that I don't over constrain the market (let it do what it will do for the interval I allow--no managed trading) -- I want my trades to be Mac-Truck proof, so the trade is not dependent on me, once launched. (Personal preference for trade management) -- I continue to evaluate and tweak the entry and exit criteria and do expect this to loose favor eventually as the market morphs the IV of these terms. It seems to be a nice companion trade to my other short volatility trade, so am happy to discover another (so far) viable trade.
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Good question! IFF we were near EOD today (is currently 8:21AM Pacific -- would prefer entry after 12:45 Pacific) and IFF the terms were in Backwardation (they are NOT so I would not enter trade) the new trade (since today is up, expect tomorrow to be down) would be something like BUY +1 1/1/-1/-1 CUSTOM SPX 100 (Weeklys) 24 APR 23/24 APR 23/17 APR 23/17 APR 23 4115/4000/4115/4000 PUT/PUT/PUT/PUT @xx.xxLMT MARK
Your observation is correct! The strike is placed 100 points beyond a forty delta strike currently. -- I hope to real this in to a more fine grain selection in time, but this has back tested well (unintuitive, perhaps as there are multiple factors in play). -- I expect this places the strike beyond the vast majority of the moves (something like 3 times the Average daily move)
No. Currently, and hope to keep it so {still early so I may change my mind}... These are cannon-launch trades. Fire, then it does what it does. I close the trades the next day near end of day regardless. Currently using TOS close the entire position at MARK - 25 cents at 12:55 Pacific time . Here is order that should close today.
SELL -2 DBL DIAG SPX 100 (Weeklys) 21 APR 23/14 APR 23 4105/4220/4105/4220 CALL @Mark-.25 LMT GTC OCO #xxxxxxxxxxxx SUBMIT AT 4/13/23 12:55:00 [TO CLOSE/TO CLOSE/TO CLOSE/TO CLOSE]
Steve G
Active member
M12 - I am working on a Deep Dive Calendar/Diagonal Course to accompany my Deep Dive Butterfly course, but it won't be ready for a couple of months yet. Calendars are very unusual in the way the trade and the fact that the "TENT" is not fixed and stable in the P&L diagram and it is CRITICAL that if you are going to trade them - you understand when and how that tent will move - otherwise you can get caught really off guard. That said, as part of my current alert service we do tend to average about 1 SPX calendar per week that we put on.
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What is the link to your courses?