Last week the market continued lower despite being deeply oversold, putting one of our Calendar Options positions in adjustment territory for the second time. It’s been a wild ride for EEM: After a decline of more than $3 Wednesday, the ETF dropped another $1.50 in early trade Thursday morning, to a low of $127.92, then rallied back above $130 before retreating again with the rest of the market.

IYR fared better last week. Even though the real-estate ETF fell along with almost everything else, we still were showing a profit of about 8%. If support in the $59 area fails, we’ll probably hit an adjustment trigger before IYR consolidates or rebounds. Tuesday morning’s pending home sales data will likely be the catalyst for any major move, up or down. But it’s EEM that we need to keep our …

Despite having been burned by last week’s colossal head-fake, we were hoping to avoid re-adjusting our RTH double-calendar—but Friday’s drop of 2.7 times the ETF’s one-day standard deviation was not a good sign. On Monday RTH fell through its 50-day moving average and closed just pennies below it. After bouncing off the 200-day MA yesterday, RTH is down again this morning and trading below our theoretical break-even. We’re once again approaching our maximum loss, so we’re making the following adjustment:

-2 RTH July 100 call +2 RTH June 100 call for a net credit of $0.80;

+2 RTH July 95 put -2 RTH June 95 put for a net debit of $1.55.

Don’t forget that two contracts here represent all of our position (e.g., if we had 4 contracts at the 100 strike, we’d be rolling all 4 of them). Now we have a single calendar put spread at the 95 strike. Normally

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Okay, this Calendar Options thing sounds great, right? Yeah, we think it does. Later in this post we’ll tell you how Calendar Options is going to work—but before you go out and open up half a dozen 10-contract positions, there are a few things you need to know, at the very minimum, about trading calendar spreads. Even though they resemble iron condors in some ways, those longer-expiration options lead to some very important differences: Calendar spreads are almost always net-debit trades, which means that we won’t have as much cash sitting in our account earning interest. . .but at current rates, that’s kind of a joke anyway. Because calendar spreads have less distance between the break-even points, adjustment is an important part of the strategy. In our view, this is a plus, because we can change the profit curve of a ...

If you know what an iron condor is—which, if you’re reading this, you probably do—you also know that it isn’t the only options strategy out there. It’s worked very well for us, consistently providing close to 10% average monthly returns—but a lot of our subscribers have expressed an interest in, shall we say, a bit more variety. Sure, our bonus trades mix it up a little, but we thought it was time we started talking about other kinds of trades on a regular basis. That’s why we’re introducing Calendar Options. Condor’s Complement So what’s the best way to complement our iron condor positions? We like the idea of profiting no matter which direction the market takes from week to week, especially with so much economic uncertainty out there right now. So we’re going to stick with the delta-neutral theme for our ...