Calendar spread option update: It’s been a few days and GLD continues moving up slowly.
The weekly calendar needed to be adjusted but since it expires today I am not posting the picture here.
The Oct/Nov Calendar is still within the breakevens. It is trading right now at $126.72 and the upside breakeven is $127.95. Here is what the trade looks like right now. Notice how it has gotten close to the upside breakeven.
Calendar spread example
If I add the 128 Oct/Nov Calendar it will look like this:
This will center GLD in our trade and extend the breakevens. But I am going to hold off making this adjustment until GLD moves up a bit closer.
Adjusting calendar spreads
When adjusting you need to look at multiple factors. Time decay is working in our favor and so holding off on an adjustment can result in a higher yield. Also, even though the trade is far from the breakeven point I am still down about 5% so far in the trade. I don’t want to be down a lot more before I adjust because a sharp up move would force me to exit the trade at a max loss.
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