Ok so we’re going to do a cal-vert stairstep.
What that means is… we currently have on a bull call spread and we’re going to roll the long option up and out to convert it to a calendar.
This will basically iliminate all risk in the trade, cut our delta down, and give us an opportunity to stick around in the trade as we head into earnings.
So as it stands.
We entered the Oct 100 calls at a basis of 1.95
We sold half at 2.60
And then we sold the Oct 110 calls at 1.52
So we are going to SELL TO CLOSE the Oct 100 calls and BUY TO OPEN the Nov 110 calls.
That way we will have an Oct/Nov 110 call calendar.
To “roll” this trade, we will use a diagonal spread.
| IWO Premium Order Ticket | ||||
| Type | Asset | Duration | Strike | C/P |
|---|---|---|---|---|
| STC | BABA | 21 Oct 16 | 100 | Call |
| BTO | BABA | 18 Nov 16 | 110 | Call |
| Total Credit: | 3.6 | |||
