http://www.selltheta.com In this video, we show you how we use the scan tab and criteria to trade long calendar spreads. In this video we use the example of $LEN (Lennar Homes) as a candidate for a long calendar spread. This is a positive theta, low margin and low risk strategy. A Calendar Spread is an options spread that benefits from a long option further out in time and a short option closer in time. It is a positive theta trade, but can benefit from direction or volatility increasing, depending on how you place the trade. Visit us at other locations: Web: http://www.selltheta.com Facebook: http://www.facebook.com/selltheta Twitter: http://www.twitter.com/selltheta =====Transcript Below====== Ok Then, Hello. today I'm gonna show you how to do a calendar spread and find the trade using the scan tab in the chart tab on thinkorswim so first we're going to go to the scan tab and I already have it loaded up, but if you go over here I've for saved this scan that I use quite often I called a low Volitility PPS Sell and then I even put what I want to do so I i'm covering all symbols anything with over 1.4 million shares traded daily and I'm using a mark price over seven dollars and i'm looking for an IV percentile under 45 percent and then I look at the PPS sell signal which has a Pearson pivot sell signal which is a proprietary trade indicator that is already on the thinkorswim platform and then hit scan you get this list this is all the the long calendar potential candidates for me today and so I usually pick one a day and try to hone in on it and today we're going to look at stocks hich have a a 31 percent IV percentile rank which means it's has a low volatility rank in relation to itself what i'll do is i'll pull in our upon the chart tab just visually look at the stock to make sure it's kind of topping off and has potential to go down I think it could go down to 39-38 pretty easily if the market turns around so it looks like the tail and other short to a three-day rally based on your visual interpretation, I think it's going to go down to 37 38 range pretty easily so what I will do is then go and go to Analyze tab and put on this trade at 84 cents I actually paid 86 Cents earlier today so it actually worked to our benefit buy another one I'm not going to buy it now but what we'll do is go a couple months out on the long side so I went to May and it's february twelfth right now I had bought the short March at thirty-seven dollars little below only paying 85 cents for this trade and what we want see is that the stock goes down a couple bucks and volatility goes up once that happens whether it's two days, five days are 20 days, I'm going to probably close out a bit want to make 20-30 percent on this trade I use to roll on but now I just try to get out if the market works in my favor pretty quickly and what I've found is this Pearson pivot a lot of times should go up little the very next day which might be a good entry point and then it usually will a go down afterwards. you can see it behaves pretty well on the stock goes down there's a couple of times that didn't quitedo what it should but I think it's a given that it's had a little run-up and has a good chance of going down again so that's it I can I use the scan tab to identify stocks of interest and I got a chart just for visual to make sure it's exactly what I want and then finally I go on put place the trade 84 cents a high price I'll this set a dollar ten or so make you know 30-40 percent on my money and hopefully just a few days give it a try Just remember that options involve risk and this is not a trade recommendation and you could go to the characteristics of options and learn more about option risk if you have any questions about this please visit our website http://www.selltheta.com and we'll explain more in the comment section on that page or the YouTube page that this video iss posted on otherwise have a good day and good luck trading

• published: 23 May 2014
• views: 7