Call Calendar Spread Stock Options Trade

In my last post, I showed you one trade that did not work out quite as planned. That's just a fact of life when you're trading. The key is to be prepared and have a plan.

Here is low IV, bullish calendar spread on NRG Energy, Inc. Implied volatility was at a relative low, making it easy to buy the back month option. The stock had been on a tear, reaching new highs with regularity. On April 26th, I bought a June / Sept. $85 Call Calendar, creating a position that looked like this:



The expectation was that NRG would continue to trade higher, up into the center of the calendar spread's profit zone. Today, NRG is at $84.85 and the trade now carries a 27% profit.

June expiration is a long way off. It is unlikely NRG will stay put for that long, but I have a 27% profit in the trade right now. I will now be looking to adjust the position to capture the profit, reduce risk, and/or take advantage of continued upward moves. Of course, I can always close the position and take my profit.

This is just one of several trades opened during the last 30-days in my private Trading Room. All of the trades are limited risk, high probability option trades.

Good trading!

Christopher Smith
TheOptionClub.com