Walmart is a great shopping alternative in the current economy. It should outperform other retailers in the coming months. So lets try a bullish calendar to capture some upward movement.
BTO 3 WMT Mar/Jun 57.5 Call for $.90
The plan is wait till March expiration to buy back the March short and then sell April and then hopefully the May.
Wednesday, February 18, 2009
Walmart Calendar
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2 comments:
Greetings:
Why a bullish calendar? Wouldn't a butterfly be a better play having the same expiry risk graph shape and short not long vega?
Maybe there is something to this I just don't get.
semuren
The are a number of ways to capture the upward movement, a butterfly is one of them. However, my purpose was to cashflow for several month by selling Mar, Apr, and May options while keeping the long June option.
The vega concern is valid, but the theory is that time decay and the price movement will compensate for a decrease in IV.
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