{"id":17,"date":"2009-10-08T16:13:35","date_gmt":"2009-10-08T16:13:35","guid":{"rendered":"http:\/\/dailyma.com\/faq\/front-month-and-back-month-in-options-trading\/"},"modified":"2010-02-09T01:46:15","modified_gmt":"2010-02-09T01:46:15","slug":"front-month-and-back-month-in-options-trading","status":"publish","type":"post","link":"http:\/\/dailyma.com\/faq\/front-month-and-back-month-in-options-trading\/","title":{"rendered":"Front month and back month in options trading"},"content":{"rendered":"

Q: A couple of weeks ago I purchased the Trading Pro System and also subscribed to the Daily Market Advantage.<\/p>\n

You have provided an unbelievable resource and I am still working on paper trading and learning the adjustments on the iron condors and Calendar spreads. It is very interesting information.<\/p>\n

I have watched the video on the Victory spread strategy several times. In attempting to utilize the strategy in the video I am not currently finding trades that match the low downside risk demonstrated in the video.<\/p>\n

It seems currently many options front month I.V. is lower than further out months \u2013 I am not sure if this is affecting my analysis of the trade. I was also wondering if the relative close time until Oct expiration affects the outcome of this strategy? I did try numerous examples with selling either the Oct or November options.<\/p>\n

Do you have any current examples of the Victory Spread strategy that could help me understand what I am missing or do I need to wait until after Oct expiration and then retry my analysis.<\/p>\n

I greatly appreciate your expertise and enjoy listening to your market review each night. Keep up the great work.<\/strong><\/p>\n

A: The front month (Oct) has only 8 days left- that is the reason you cannot find any trades. There’s no time premium left in the front month.<\/p>\n

The general rule is: Never use a front month with less than 30 days remaining.<\/p>\n

In addition, the Vol will give you different risk profiles that may not be favorable. You want the front month to be a slightly higher vol than the back month.<\/p>\n

A trick to finding those types of trades is to look for a stock that has sold off hard. For example – RIMM (on 9\/25\/09)<\/p>\n

It lost about 15+ points in one day skyrocketing the front month Vol while the back month had a lower Vol.<\/p>\n

The setup was very favorable at that time – it’s too late to do it now.<\/p>\n

So use the 30-40 day month options and find stocks that have that positive volatility skew.<\/p>\n","protected":false},"excerpt":{"rendered":"

Q: A couple of weeks ago I purchased the Trading Pro System and also subscribed to the Daily Market Advantage. You have provided an unbelievable resource and I am still working on paper trading and learning the adjustments on the iron condors and Calendar spreads. It is very interesting information. I have watched the video … Continue reading “Front month and back month in options trading”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,10,13],"tags":[],"class_list":["post-17","post","type-post","status-publish","format-standard","hentry","category-options","category-training-videos","category-victory-spreads"],"_links":{"self":[{"href":"http:\/\/dailyma.com\/faq\/wp-json\/wp\/v2\/posts\/17","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/dailyma.com\/faq\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/dailyma.com\/faq\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/dailyma.com\/faq\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/dailyma.com\/faq\/wp-json\/wp\/v2\/comments?post=17"}],"version-history":[{"count":0,"href":"http:\/\/dailyma.com\/faq\/wp-json\/wp\/v2\/posts\/17\/revisions"}],"wp:attachment":[{"href":"http:\/\/dailyma.com\/faq\/wp-json\/wp\/v2\/media?parent=17"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/dailyma.com\/faq\/wp-json\/wp\/v2\/categories?post=17"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/dailyma.com\/faq\/wp-json\/wp\/v2\/tags?post=17"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}