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With FB at 159.83 at 11:34 central time today April 9, I did a Live Pre- Earnings  Calendar

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Step 1: Set up:  Buy 1  Apr 27  160 Call,  Sell 1  Apr 20  160 Call,  2.82 Debit.  Implied Volatility of long call is 47.71 and  Implied Volatility of short call is  35.98.

Step 2:  Profit Target and Max Loss:  Looking to make $30-$40 for every 1 contract, which would be 10-15% on Capital of $282. Max Loss would be around $50 or about an 18% loss on $282. So for a profit, when the Calendar price goes to the 3.15-3.25 area,  would  take off . When the price of the Calendar goes to around 2.30 from the initial debit of 2.82, I would get out for a loss.

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Step 3 is When to Adjust and Step 4 is how to adjust. For today’s trade, I will stick with just step 1 and Step 2 and not get into Adjustments.  For people new to this type of a Calendar, let’s learn to walk before we learn to run.

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