Options Income Trading: Calendar Spreads, Greeks, Butterflies- Himanshu Raval

Himanshu Raval has been described as the "Calendar King" (http://traders.com/Documentation/FEEDbk_docs/2012/10/Sarkett.html) (http://traders.com/Documentation/FEEDbk_docs/2012/10/Sarkett.html) and we are delighted that he has accepted our invitation to talk remotely to our group.

Himanshu is extremely well regarded in options trading circles, not just for his original forte, calendar spreads, but also for trading expertise in all strategies, including the well-known butterfly and condor strategies. In following Capital Discussions, I learned that he has spent many years doing meticulously detailed back-tests of strategies, and trades many of them. He collaborated with Jim Riggio in evolving the Kevlar2 broken wing butterfly strategy (which is like M3 but for SPX rather than RUT).

I indicated to Himanshu that he is welcome to talk about whatever he wants, and he indicated that "I probably will spend more time on Calendars and some time on overall portfolio greeks. In order to get them to be optimal, I do add butterflies (M3, Kevlars and BWB) so will talk a bit about that."

Himanshu has recently been trading calendar spreads on stocks such as AAPL, IBM, SPX, LMT and TSLA.

Calendars sound simple ("sell the near month and buy the far"), but turn out to be anything but straightforward to trade profitably. Major issues include: trade selection and Timing, how close to the near month to make the far month, when to use double calendars, when to roll, how to deal with the risk of unexpected backwardation of implied volatility. and how much back-testing to do.

I expect that we can gain some significant insights into these issues from this talk. I can tell you that I gained more from looking at some of his presentations elsewhere on calendar spreads than I got everywhere else combined. I think I see how to go about (backtesting) trading them now.

I know that we have some calendar traders in our group and I hope that they will bring questions and experiences. I am sure that Himanshu will be able to answer questions about other strategies such as M3 as well.

Himanshu has a local connection, being a graduate of UNC-CH. Besides proprietary trading, he also consults and does education. Capital Discussions sells a trade alert service on Himanshu's trades at http://a.capitaldiscussions.com/himanshu-raval-trade-alerts-calendars/ .

Himanshu will take the first hour (and as much more as/if he wishes).

Later in the second hour, Ryan S. will demo a spreadsheet that he has developed that will enable you to quickly evaluate and enter new Road Trip Strategy Trades. Road Trip is a now-very-popular option income strategy that we have covered in as recent meeting. We will review the strategy briefly for those who missed the earlier talk. Using Ryan's spreadsheet, you can copy a trade and paste it directly into TOS. We are going to go in depth in later meetings into our members' experiences trading such strategies (including also M3 Butterfly and maybe Calendars).

We have room in this meeting for one or two more very short updates on their trading from anyone who wants to give one. We will also mention plans for some coming talks.

After the meeting, anyone who can do so is invited to join us at the nearby Cameron Bar and Grill, each on their own tab.