Free Trade: RUT Calendar Spread

November 11th, 2009 Genius

Here’s a quick and easy trade.

Buy Dec 590 Call, Sell Nov 590 Calls for a debit of 10.65 per spread.

If you do just one contract, it will cost you $1065 plus commissions. If RUT does not move much by Monday you should have over a 10% gain. Even if it moves about 8 points either way, you should still have close to a 10% gain.

This is a great trade to papertrade.

RUt Calendar Spread Graph

 

2 Responses to “Free Trade: RUT Calendar Spread”

1. Larry Lockwood says:

   December 3, 2009 at 2:10 pm

   I realize this is an old trade but I wanted to comment that when I trade calendars I have a hard time knowing when to bail out or just sit tight. What is the optiongenius bail out point for time spreads like this one?

   LL in Philly
2. Genius says:

   December 22, 2009 at 1:25 pm

   Normally, the easiest way to trade them is to adjust when they hit your breakeven. You can either take off the trade and reposition, or just double your size by adding a new calendar.