Taking Advantage of the Long Weekend

by Jeff on February 12, 2010

This is even better than the 4 day weekend of Thanksgiving, since it’s so close to expiration. There will be huge evaporation of premium on FEB short options, so if you are in this boat then enjoy your weekend knowing that you will make a lot of money!

For example, the Option Guru’s Priceline.com (PCLN) trade is at +355 today. At the same underlying price on Tuesday, it will be +812! I suspect there will be a lot if exciting things happening on 2/16, so make sure you are ready to exit with any winners you have. I will exit PCLN regardless since they announce earnings after the market close.

With the long weekend in mind, Mr. Guru began to open trades for MAR expiration. For convenience sake I placed the In Play chart here.

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The first trade was on 2/8 with a GRMN 30/34 Double Call Calendar. This is already making money. I will let the charts below act as our commentary – after all a picture is worth a thousand words, right?

On 2/11 the Guru entered an Iron Condor on DIA (MAR +92/-94/-107/+109)

Also on 2/11 we entered what might be the first leg of a Double Calendar on AAPL – thinking that the price could move either way but also thinking more bullish than bearish.

Today the Option Guru entered what could be the first leg of a double calendar on GS and a MAR 42 Bull Put on JOYG. We are not 100% confident in the JOYG trade since earnings are 3/3 – we figure we can pull $80-90 out of this before earnings if the stock makes a bullish move.

Also this week I closed many FEB spreads that were way OTM or might have been at risk over this long weekend. Check out the Closed 2010 page.

I wanted to let you know that I was pretty shook up with the JAN 2010 results. For FEB expiration I took on much smaller positions just to help build my confidence back up. Considering that I never had more than 30% of my account a risk, the results are pretty stunning – as you will see in a few weeks.

Oh yeah, for you TOS folks, you need to watch the Wednesday 2/10 Chat that you can view via the TOS thinkdesktop and on their web site. They have integrated GainsKeeper with Penson and you can get all your 2009 data you need to file your taxes in many different formats. Just check out the video and you will see what I mean. ALL AT NO CHARGE! Sure IB is cheaper, but I just ♥ TOS!

- Jeff

Tagged as: bull put spread, Calendar Spread, expiration, thinkorswim, Vertical Spread

  • http://theoptionguru.com/blog Jeff W

    Paul – I sent you the spread sheet. u25c4 Jeff u25ba

  • http://theoptionguru.com/blog Jeff W

    Paul – I sent you the spread sheet. ◄ Jeff ►

  • Paul Stocks

    Thanks for the Yahoo link. The files and links page are helpful.nlooks like I have a lot more reading to do.nYour link is to your old blog!nI didn’t see what I was looking for, though I need to go back and look around a little more.nI would like to see what you are using, if its not to much trouble.

  • Paul Stocks

    Thanks for the Yahoo link. The files and links page are helpful.
    looks like I have a lot more reading to do.
    Your link is to your old blog!
    I didn't see what I was looking for, though I need to go back and look around a little more.
    I would like to see what you are using, if its not to much trouble.

  • http://theoptionguru.com/blog Jeff W

    Paul,nnI have gone through several iterations of CC tracking sheets and found that the simpler the better. What I do is exactly what you see on the Conservative Account tab. It does require some copy/paste to add formulas and new trades. If you haven’t, you should join the Yahoo! group justcoveredcalls. Once in you will find several different tracking spread sheets in their Files section. If you are still interested in what I use I can send a copy to your email – just let me know.nnu25c4 Jeff u25ba

  • Paul Stocks

    JeffnnCould I get you to share what software you use to trackmanage your active trades and completed trades? I subscribed to the CallWriter service and the Excel spreadsheet they supply is lame (I’m being polite) No formulas, all manual entry and manual calculations. nI see people selling spread sheets for covered calls and was curious if you wrote your own or use a commercial product.nnMany thanks for all your writing!nnP:)nn

  • http://theoptionguru.com/blog Jeff W

    Paul,

    I have gone through several iterations of CC tracking sheets and found that the simpler the better. What I do is exactly what you see on the Conservative Account tab. It does require some copy/paste to add formulas and new trades. If you haven't, you should join the Yahoo! group justcoveredcalls. Once in you will find several different tracking spread sheets in their Files section. If you are still interested in what I use I can send a copy to your email – just let me know.

    ◄ Jeff ►

  • Paul Stocks

    Jeff

    Could I get you to share what software you use to trackmanage your active trades and completed trades? I subscribed to the CallWriter service and the Excel spreadsheet they supply is lame (I'm being polite) No formulas, all manual entry and manual calculations.
    I see people selling spread sheets for covered calls and was curious if you wrote your own or use a commercial product.

    Many thanks for all your writing!

    P:)

  • http://theoptionguru.com/blog Jeff W

    Anh,

    You can use Spread Hacker on the Scan tab in TOS, but it's not what I use. Spread Hacker comes up with some really weird stuff and I haven't figured out how to filter out the chaff yet – but I am working on it. So here's what I do:

    I have my watch list of 50 or so candidates that I check almost every day. I like calendars that have a positive skew to the front month, but it's not critical – although I don't like anything worse than a -2% skew.

    Around the week before expiration, I make my calendar shopping list. First I bring up my watch list in a Watch List Gadget, then I open the Trade tab and collapse all the option chains. I then link the watch list to the tab (say 1 Red), then I arrow down through the watch list checking the IV on the far right for the months I want to do my calendar in and writing the symbols down. Yeah, I know, it's not the prettiest – but I usually only do it once or maybe twice a month and it takes about 10 minutes. What's nice about using the Gadget Watch List is if there are earnings coming up, you get the little blue book icon next to the symbol.

    Although I rarely hold through earnings, you can hold UP TO earnings, like I am doing with PCLN. If you have enough time to let theta work for you, then it can be a very good trade.

    ► Jeff

  • Anh

    Hey Jeff,

    I am very interested in the double calendar spread trades which you have shared recently on the site. May I ask how you come up with potential candidates or if there is a scanner algorithm to detect volatility skew avail on thinkorswim?

    many thanks,

    Anh

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