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Post by ThetaJunkie on Jun 9, 2013 1:28:05 GMT
i'm struggling to come up with when to close diagonals. Since there is at least one roll available to a diagonal, I just don't know whether you should:
- Close when you reach some amount of profit;
- Roll when you reach some value of the roll;
- Always roll at expiration
Anyone have any guidelines they use?
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Post by ThetaJunkie on Jun 11, 2013 22:11:19 GMT
So today Tom and Tony added some answers to this question.
At around 10 days left to expiration, look at those diagonals where the price is near the short strike and roll them. I believe the thought is that with 10 days left, even though there will be premium when its right ATM, the farther month will have much more.
Until there are 10 days left, do not touch the diagonal
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robyn
New Member
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Post by robyn on Jun 17, 2013 0:44:52 GMT
Here are my guidelines for diagonals:
treat them as you would a calendar until it gets to the last roll and it turns into a vertical spread. Roll the front month with 20 DTE or less when the stock hits your short strike. Otherwise leave it on until there is about .15 of extrinsic value left but always roll by Monday of expiration week no matter what.
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