Dear everyone,
I am absolutely new to options trading and I'd like to ask a question about something that caught my attention.
I played a bit with a broker's options platform and figured out that a long AUD/USD call with 28 days till expiration is more expensive in terms of premium than what I would receive for selling 4 AUD/USD calls on after the other, each with 7 days expiration. The 28 day long call was something like 1200 and the 7 day short call was around 400.
Obviously I am missing something here, because buying a 28 day call and selling weekly calls until the long call expires would leave me with no risk and positive premium, but I know trading does not work like this.
Could someone let me know where I have made the mistake?
Thanks guys!
Csabi
I am absolutely new to options trading and I'd like to ask a question about something that caught my attention.
I played a bit with a broker's options platform and figured out that a long AUD/USD call with 28 days till expiration is more expensive in terms of premium than what I would receive for selling 4 AUD/USD calls on after the other, each with 7 days expiration. The 28 day long call was something like 1200 and the 7 day short call was around 400.
Obviously I am missing something here, because buying a 28 day call and selling weekly calls until the long call expires would leave me with no risk and positive premium, but I know trading does not work like this.
Could someone let me know where I have made the mistake?
Thanks guys!
Csabi