I am going to use the money I made on my previous rather "long-term" (from a trader's standpoint) trade in Valeant Pharmaceuticals' (VRX) options and reinvest it into a very short-duration trade in the same stock's options: (Source: optionsprofitcalculator.com) The trade demonstrated above is a calendar spread involving VRX's at-the-money options. The rationale is simple: (1) The weekly options are expensive, as historical data show: (Source: optionstrategist.com) As you can see, the current weekly options on VRX are priced using implied volatility from the 84th percentile. This means that the IV used in the options pricing is more expensive than in 84% of time over the past twelve months. I definitely like it as a seller. Besides, with the stock edging higher today, call options are ostensibly more interesting than puts. (2) The trade is very cheap - it costs only $38 to buy one pair. This is very convenient because I do not want to allocate hundreds or thousands of dollars to this trade. (3) The "window of safety" is very high in this instance - the stock has to expire 5% higher or lower than the current market price in order for me to lose money, as my calculations indicate: (Source: optionsprofitcalculator.com) The best part of this trade is that the stock will have to exhibit higher volatility to "break away" from the window as the trade nears expiration. (4) The risk-reward ratio of 1.2:1 is attractive for such a short-term trade. In addition, I will lose the maximum amount of $38 per share if and only if the stock drops below $18 per share by Friday. This is a ~20% drop in market value, which I consider improbable for such a short amount of time. In addition, no events are taking place this week that may seriously increase volatility in the underlying. I am looking forward at initiating the trade in the morning. What do you think of this trade?