RUT Weekly Calendar Trade #3

I opened my third weekly calendar trade Tuesday morning (4/28/15) at the 1255 strike. I paid 6.45, which I thought was an excellent price! I later realized this was lower than usual because it was a call calendar instead of put calendar. That shouldn’t make too much difference but if I’m getting used to prices in one (puts) then seeing prices in the other (calls) could throw me off.

The market really tanked yesterday. This trade had been up as much as 6% on Wednesday although I’m not sure I could have gotten executed there. Yesterday morning, the downside adjustment point was hit. I rolled one of the 1255 call calendars to a 1225 put calendar. Unlike my first weekly calendar trade where I was able to do this roll for just 0.06, this one cost 2.25. Again though, much of that was probably due to the difference in implied volatility between calls and puts.

The market continued lower yesterday and I eventually closed this trade for [more than] max loss: -19%. This was not as bad as my first loser, which was 21%. Still doesn’t make me feel any good, though.

The question remains: how often does this happen? No doubt the market is shaky this week. Certainly the market does seem much calmer when it’s doing the slow grind upward but it just so happens that in the three weeks I have been doing this trade, it’s looked ugly and more ugly. RUT fell 31 points during the course of this trade. In trade #1, the market fell only eight points from open to close but did a sharp reversal.

I’ll lick my wounds and get ready for next week.