This is a trade I outlined in a series of video tutorials.
Aug/June 90 Put Calendar Spread
|| 1. Exit if I can
lock in a 40%
2. Roll/exit if within 5-7 days of front month expiration
I outlined my basic motivation for this trade in the first video
shown here. I was expecting to see a bit of a pullback on SPY, maybe to
the $90 level or lower.
This part of of the video tutorial covers position sizing, entering
the trade, and planning exits.
So far, no pullback has emerged. The plan at this point is to wait until Monday and if no pullback, then exit.
Monday there was a nice pullback and Tuesday I went ahead and did the roll of the short June 90 to July and took in $1.60 in credit.
Nice pullback but we are still several weeks away from expiration. With SPY being right at the short strike, but 22 days until expiration, there's just too much value in the July short strike and that affects our ability to close the spread out for a decent price. I'd like to get at least $1.60 if possible.
This video shows how to do some 'what if' scenarios around time
erosion, price movement and volatility changes to see what this spread
could be worth under different conditions.
I closed the trade on Tuesday right after a long 3 day weekend. Even though there was still around 12 days until expiration, I felt this was a good time to close the trade out. I received $1.63 for the final roll/close making the total profit in the trade $3.23. With an initial debit of $2.55, that's a $.68 profit or 26.6% ROI.
Here's my final video wrapping the trade up.