MARKET MADNESS
Traders How-To Guide for Dominating the Markets in 2021
Defining Diagonal Calendar Spreads
Adam Mesh | AdamMesh.com
● How to Identify the Best Option Trade to Make
● One simple trick that you will use for as long as you are a trader!
Defining Diagonal Calendar Sprads
One of the most amazing privileges I have is to speak with individual traders from across the globe every week. Whether’s it’s at a live speaking event (pre-corona … we’ll be back strong!), more likely on a webinar or even via email, that communication let’s me know what individual traders are doing and what you are interested in.
By simply asking questions throughout the presentation, it also let’s me know what you are not doing. One of the most overlooked but valuable tools in options trading is premium collection. Many people trade options, some collect premium through credit spreads but only a very small group of traders use the diagonal calendar strategy.
The diagonal calendar allows you to become a landlord of the options market. It’s essentially a synthetic covered call. It’s both risk controlled on the short side and can become open - ended on the long side plus it can be done for just hundreds of dollars. Here’s what it looks like:
Take a look at this bullish example of MU:
First, we identify an opportunity that we like using technical analysis (I’ll cover this in detail via a live presentation).
Then we put on the long call, typically 60+ days out in time:
Now, we reduce our sin with premium collection using a shorter dated call.
*Notice how the long call is for 64 days and the short call is only for 9. Now, the amount we collect each week will vary but using different strikes, we will look to average around the same amount of premium collection each week and if we do, here’s what it looks like:
The average weekly collection is worth more than the cost of the option so even if our anchor (long call) expires worthless, this trade can still be profitable!
Premium collection is the best way to both defend trades and enhance performance in a more volatile market like the one we are currently experiencing. Real estate is fantastic because your time does not correlate with your money. This is the real estate version of the stock market where you collect rent every week! I pride myself on response time so if you have any questions or want further follow up, email me at adam@adammesh.com.
For the upcoming summit, my live presentation will go into much more detail on that first step of the process, how to identify the best option trade to make.
I’ll show you one simple trick that you will use for as long as you are a trader!
About the Author
Adam Mesh
Company: The Adam Mesh Trading Group
Website: www.adammesh.com
Services Offered: Trading & Options Education, Subscriptions and Live Options Training Rooms.
Markets Covered: Options, Stocks
Adam Mesh started his career as a day trader in the 90's as electronic trading revolutionized the markets. After executives at the firm recognized his unique ability to breakdown and translate what's happening in the market, he quickly moved through the ranks gaining national attention.
Mesh has been recognized by Fortune Magazine for an uncanny streak of successful trading and has appeared on every major financial media outlet. Mesh believes that the key to stock market success is to keep the strategies simple enough so that they can be repeated.
"Consistency and Discipline are always found at the base of every great success story."
IMPORTANT NOTICE: No representation is being made that the use of use of this strategy or any system or trading methodology will generate profits. Past performance is not necessarily indicative of future results. There is a substantial risk of loss associated with trading securities and options on equities. Only risk capital should be used to trade. Trading Futures, Options, Forex, and securities is not suitable for everyone.
DISCLAIMER: Futures, Options, Securities and currency trading all have large potential rewards, but they also have large potential risk. You must be aware of the risks and and be willing to accept them in order to invest in the markets. De with money you can't afford to lose. This website is neither a solicitation nor an offer to buy/sell Futures, Options, Stocks, or Currencies. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
DISCLAIMER: Futures, Options, Securities and currency trading all have large potential rewards, but they also have large potential risk. You must be aware of the risks and and be willing to accept them in order to invest in the markets. De with money you can't afford to lose. This website is neither a solicitation nor an offer to buy/sell Futures, Options, Stocks, or Currencies. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 : Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.