Week ended 16th December: OTM Calendar in the Nifty

[Michael Gonsalves]

This week, I want to try my hand with an OTM Calendar spread instead of an ATM Calendar spread to see if it improves my chances of winning. The max profit with the OTM is obviously lower than that of the ATM. However, it is a fact that the concept of max profit is an illusion that is unachievable most of the time. Even if one can lay hands on a portion of that, it would count as a successful trade.

[Michael Gonsalves]

The Nifty OTM Calendar was basking in gains of nearly Rs. 1.5 Lakh till today morning. However, the severe plunge in the ViX of nearly 7% took a steep toll on the long options. I barely managed to exit with a breakeven profit.