Cycle Trading

[Duma]

I will pass on your exercise, I have enough going.

if it moves against the direction you are expecting it will be big loss

I watched several videos this afternoon and the way that everyone was constructing their diagonals, what you said was true.

As an example one of the videos did this spread and this is the normal way everybody sets up a diagonal or something similiar.

Long was was 6 months out and 6 ITM (delta of 58%)
Short was 1 month out and 19 OTM
Cost of 33.20 for long call
and credit of 3.20 for short call
With this set up, what you said is right, if price moves down, there will be a big loss.

Adam set up is very different, both calls were ITM. The market moved against me today for IWM -1.38. At EOD I was up .68 or $68 for the day. I am not advocating this system yet because I sure don't understand it fully and not really sure of my calculation. But I did try to go through where I would be in 1 week with 3 different market moves for IWM. Not sure of my calculations yet at all. Cost of spread was 3.25 or $325.

 
 Market Move  Profit 
   +5%         $445 
    0%         $355 
   -5%         $446

Sounds too good to be true so I could very easily missed something.

I ponied up $29.95 to buy his book or online access to it. It is pretty easy to get a lot of detail from a presentation made for people who don't know much, but I am hoping for a few more good titbits of info.