Today I’m going to walk you through a recent trade on AAPL stock which started as a bullish calendar spread which was then adjusted into a double calendar.
On October 15th, AAPL was trading around 121 and we entered the following trade.
Trade Details: AAPL Bullish Calendar Spread
Sell 7 AAPL November 6th $125 calls @ $3.80
Buy 7 AAPL November 20th $125 calls @ $4.80
Premium: $700 Net Debit
By October 26th, AAPL had dropped to 115 which was approximately the lower breakeven point and the level I had set as my adjustment point.
I added a second calendar at 105 to turn it into a double calendar.
Trade Details: Conversion to Double Calendar
Sell 7 AAPL November 6th $105 puts @ $1.20
Buy 7 AAPL November 20th $105 puts @ $2.09
Premium: $623 Net Debit
Total at Risk: $1323
Before Adjustment
After Adjustment
Fast forward to November 2nd and AAPL was trading at $107.69 and the double calendar was in profit to the tune of $154 or around 12%.
With only a few days until expiry, this was a good place to take profits.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
