Sheridan Options Mentoring Blog |  |
| Trade idea for today: Ratio Calendar Posted: 01 Apr 2011 10:09 AM PDT VIX is around 16.5 today, plummeting down from the 30 level 2 ½ weeks ago! At these VIX levels today, I am more comfortable with the risk reward? Could the VIX go a little lower? Of course! Do I think there is more risk to the upside? You betcha! I'm looking at a conventional calendar with a little extra gusto. I'm playing a bit of a contrarian by buying an extra put. The trade is set up at-the-money so I have a nice range to make money. Upside risk management would be to make an adjustment or take off the spread if SPY runs too far past the expiration breakeven points. On the down side, volatility should increase so the position should do fine. SPY range for the next week is anticipated to be 130.50 to 136.50.
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