MTM Options Trader Newsletter - Calendar Spread and Long Calendar Option Strategies

[image]( [image] This Week in the Market It was a generally mixed week on Wall Street until Friday came around. While the G7 meetings were being held overseas this week, the DJIA went 0 for 5. The S&P 500 was able to set an all-time high on Tuesday but couldn’t sustain the momentum. News from the FOMC that it would be raising rates more rapidly than it had earlier suggested no doubt weighed on stocks with Friday ending the week in a rout. The unwind of the reflation narrative was further exacerbated by other developments: commodities continued to pull back (copper futures dropped 9%); retail sales for May were weaker than expected; weekly initial claims unexpectedly increased; and JPMorgan (JPM) and Citi (C) warned of lower trading revenue for the second quarter. As expected with a jittery market on Friday, the VIX (CBOE Market Volatility Index) spiked up 17% for the day. Implied volatility bounced off last week’s lows, which had not been seen in over a year. This coming week, traders will be looking at a mixed bag of economic news. Evidence of rising inflation will be something everybody will be watching for. The Fed made it clear it will be monitoring rising inflationary pressures and is determined to ensure they’re “transitory.” Next week will be what’s known as a quarterly quad witching, which coincides with rebalancing of some popularly traded products, including the S&P500 and the FTSE Russell indexes. Quadruple witching days can sometimes cause outsized trading volumes as fund managers seek to closely mimic certain benchmarks. However, this time around it should be noted that there are no major additions or subtractions. Jun 22: Existing Home Sales Jun 23: Current Account Deficit Jun 23: New Home Sales Jun 24: Jobless Claims Jun 24: Durable Goods Jun 24: GDP Jun 25: Personal Income and Spending [Read Our Blog]( Calendar Spread and Long Calendar Option Strategies I make no bones about it: The calendar spread is one of my favorite option trades. Like many option strategies, it can be used short term and long term as well as for a bullish, bearish or neutral outlook on the underlying. That is hard to beat in my opinion, but let’s take a closer look at the calendar spread and long calendar option strategies in particular. What Is a Long Calendar Spread? A long calendar spread is selling an option and buying a longer-term option with the same strike. Generally, the trader uses all calls or all puts. A calendar is a time spread because it benefits from the passing of time. The short option will have a bigger positive theta than [Continue Reading ...]( MTM Watchlist Here are several trade ideas we will most likely be following in group coaching class this week: QQQ – The NASDAQ held up surprisingly well last week, ending nearly unchanged. If the general market recovers, QQQ could overperform to the upside. X – U.S. Steel showed weakness along with the rest of the market on Friday, ending at the lower end of the rising channel it has been in as of late. News of robust demand from multiple industries should help it hold on while the $6T infrastructure bill is debated in Congress. ADBE – On of the few stocks that ended the week higher, Adobe broke through resistance with major league gusto. It may have shot its wad, especially if the rest of the market sags. [image] Looking for a Practical Approach to Trading? Learn to use the greeks for valuing options and executing successful trades regardless of market conditions with Dan Passarelli's "Trading Option Greeks: How Time, Volatility, and Other Pricing Factors Drive Profits." [Buy Now on Amazon]( The strategies in this newsletter are for educational and informative purposes only. All information disclosed in this newsletter should not be considered complete in its entirety. Market Taker Mentoring, Inc. will not be held responsible for changes, oversights, errors or omissions. Dates, prices, news and other information may not be accurate. Please verify all information before trading. You alone are responsible for your own investment decisions. Options involve risk and are not suitable for all investors. Before trading options, please read Characteristics and Risks of Standardized Option (ODD), which can be obtained from your broker; by calling (888) OPTIONS; or from The Options Clearing Corp., 125 S. Franklin St., Suite 1200, Chicago, IL 60606. No statement in this newsletter is intended to be a recommendation or solicitation to buy or sell any security or to provide investment or trading advice. Traders and investors considering options should consult a professional tax advisor as to how taxes may affect the outcome of contemplated options transactions. Copyright Market Taker Mentoring, Inc. 2008 - 2021. All rights reserved. Reproducing or redistributing this content is a violation of federal law. [image] If you do not wish to be contacted via email, you can unsubscribe using this link: [Unsubscribe]( Unsubscribing from email notifications DOES NOT cancel your class, subscription or recurring payments. We recommend that current students do not unsubscribe from email notifications. If you unsubscribe from email notifications, you will not be notified on how to access the classes or subscriptions in which you are enrolled. Market Taker Mentoring, Inc. 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