Calendar Trading Rules from Dan Sheridan

Written on March 23, 2008 by OptionsRopeaDope

From his latest  educational webcast - http://oiwebcasts.cboe.com/portal/v_g.asp?G=6# (click on Dan Sheridan Archives).

  •  30-35 days to expiration
  • Use ATM Strike
  • Use when implied volatility is in the lower third of IV range for the past year for the underlying
  • Max Loss 25% - Take profits at 20%
  • When underlying is at expiration breakeven, move half of spread to breakeven strike. If it looks like a new trend, reposition trend
  • Know when earnings will be reported

For the webcast, Dan used RTH as an example, and went through some adjustments in a bad month (December). Good stuff. Also mentioned that students were having alot of success trading calendars on NOC and MO.

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    • Category Posted in Videos, Dan Sheridan, Trading Rules, Calendars

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