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Sorry for the confusion.
I mean what is the strategy to define execution of the seasonal trade as selling options credit spreads strangles as in the example Versus execution of the same trade using normal calendar spreads for the outrights like buying one month outright and selling another month outright....
I assume if it is a directional move , like we expect the spread price to go higher in a certain time then we take the seasonal spread as outright ---
If the market will move in range like NG summer into fall, then we take short of credit option spreads ?
I like selling strangles when I assume that the underlying moves more or less sideways. Preferably, the volatility is high.
I like buying / selling future spreads, when I assume the spread moves in my direction. (It would not move at all in a sideways market.) Regarding spreads for growing commodities there are special strategies, using futures for two different crops of the same commodity.
I added the NGV P2.5 / C4 strangle, It has still 130 DTE, but I like the large range for which I received 670 USD, and the slow movements of these spreads.
The NGN strangle now has moved to a profit of 50 %. Currently, I watch this spread closely, and will exit it in the near future.
Almost 80 % of the profit has been made with the puts. Thus, the strangle makes nice money as long as the NGN is moving downwards.
I had planned to enter 3 months at the same time, thus, my position in NG now is rather large. As the strangles are threatened by higher prices of the underlying, I will exit as soon as the price moves above the high of the day before and above 3.0 .
Thanks for sharing your strategy Myrrdin - looks like it would provide consistent profits. Entering that far out will probably capture the exaggerated pricing that seems to exist as option contracts are initiated. Two questions:
1) How do you scan for a particular option's volatility? Is there an alert in ToS that will identify which market has IV over 70%, for instance? What's your IV threshold for selection?
2) I haven't found much on this thread regarding adjustments when the market goes nuts (actually, I don't know how to search for it within a thread and haven't had time to read all the posts since 2014!). Do you have exit/reentry criteria in that case? I optimized a nifty [AUTOLINK]ToS[/AUTOLINK] standard deviation color indicator if people want to use it.