Comment on Calendar Spreads

Amey commented on 29 Dec 2018, 11:12 AM

Hi again!

A few more questions after 2 months full of observations and experiences 🙂

1. “You can max out on leverage” – how much leverage is good in this strategy? What are your limits? If someone has a capital of say Rs. 1 lakh, what should be the limit of traded value?

2. What are the factors that can increase the spread further and further?

3. Do dividends affect price of one contract and not the other? Because sometimes the spreads are unbelievable.

4. Is it prudent to trade on the day of expiry?

5. Is it prudent to enter trades for next pair of contracts immediately following the expiry of current contract? For eg. Now that Dec-18 month has expired, should we initiate Jan and Feb-19 contracts from Friday itself? Why or why not?

Thanks.

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