Articles

We’ve started a new article series based on long-term calendar spreads. Basically, we are looking at the advantages and disadvantages of using LEAPS (Long Term Equity Anticipation Securities) and selling options against these LEAPS to pay down the cost of the long-term option.

In a recent Issue of the Trading Tutors Newsletter I wrote about a pending movement in the New York Sugar # 11 (SB) contract based upon a 30 Year Cycle. As you would well imagine I have been closely following the Sugar # 11 contract over the past weeks.

The current position that we find the markets in may be causing some to hold their breath in anticipation. When speaking with a number of people who trade, there is a sense of uncertainty in the market currently, this is tempered against the two major news items at the moment to affect our economy. The first being the strong Australian dollar and the second is the movement of official interest rates again this week by the Reserve bank.

It is common knowledge amongst the majority of the public at large that in times of uncertainty commodities such as Gold provide a safe haven to capital. Looking at an overlay chart of the Dow Jones and Gold Futures contracts, illustrates the inverse nature of the relationship these two heavy weights share more times than less.

Recently I have had some requests to cover a calendar spread strategy using LEAPS. As a result, we are going to discuss this strategy and enter a mock trade. However, because this is such a long-term strategy, we will only update it when needed instead of our usual weekly instalments. Nonetheless, this strategy is a great way to make profits without needing to watch the stock market on an hourly basis.