Just Bought the Mar 22 expiration 2340-2350-2360 Call Butterfly in SPX for $4.50 Debit at 10:24 am central. This trade expires at the end of day today. Market seems quiet so far after big down move yesterday. Between 2345 and 2355 I do really well. As SPX moves above 2355 or below 2345 we would start to lose money and I would look to get out . The goal is to sell out the trade that I paid $4.50 for $5 credit, could be within an hour, and the profit would be about 10%. If the spread that I paid $4.50 debit goes near $3.75, would get out. Total cost and Risk of trade is $450, the debit.
About Dan Sheridan
Dan Sheridan traded in the pits of the CBOE for over twenty years and is still a weekly educator at the Options Institute in Chicago. He opened Sheridan Options Mentoring in 2007, and has since educated thousands of retail traders by relying on the methodologies and strategies that were crafted by current market makers.
Entries by Dan Sheridan
Just started our new 2 week online class, “The Double Barrel Calendar”, and wanted to share the class trade we put on live yesterday. SPX was around 2370. B 1 Apr 5 2390 C and Sell 1 Mar 22 2390 C. B 1 Apr 5 2350 P and S 1 Mar 22 2350 P .Debit of $14.05 and Margin or Risk of $1405. Join us in tomorrow’s Class as we analyze this trade and cover more on this interesting strategy that serves as an alternative to the Iron Condor when Implied Volatility levels are low, which they are now. VIX is currently at 11.74. The foundation of this strategy as well as an Iron Condor is the short strangle. In this trade, we are selling the 2390 C and 2350 P in the Mar 22 expiration. Unlike the Iron Condor, which will buy the long hedges in the same expiration, we buy our long hedges in the Double Barrel Calendar in a further out expiration and the same strikes as the shorts. In this trade, our longs are in the Apr 5 expiration. In a low Implied Volatility environment, this strategy gives us wider room or Breakevens than a single Calendar Trade. […]
Today on Sheridan Mentoring TV, I put on a Live TSLA Pre-Earnings Calendar. Sheridan Mentoring TV airs Tuesday’s and Thursday’s at 1 pm central and I usually will put on a live trade every class and also explain and track every trade for educational purposes. TSLA at time of the trade was $228.46. Today’s trade I bought the Feb 10 expiration 230 Calls and sold the Jan 20 Expiration 230 calls for a debit of $5.60. The idea here is that Calendars have 2 risks, price and the Implied Volatility decreasing, and we are trying to eliminate Volatility risk. I do that by buying the expiration that will be affected by earnings and sell an expiration that will not be affected by earnings. I am looking to make around 10% for every 1 Calendar I buy, about $55 0r $60 (10% of $560). If TSLA breaks under 224 or 237 in next few days, I will instruct what to do in the blog. My short options expire in 10 days and my longs in 20 days. I will be out of this trade in 7 days, avoiding the price risk of earnings. Tomorrow we launch our 1st online class of the year, How to […]
Can you do an Iron Condor when VIX is 13.5 and the SPX is 30 points away from the all time highs? Yes, it depends on how you structure and manage the trade. This is the trade I just put on for SOM TV with SPX around $2247. Sell 1 Feb 3 2315 Call and Buy 1 Feb 3 2325 Call. Sell 1 Feb 3 2150 Put and Buy 1 Feb 3 2140 Put. Total Credit $2.20 credit. The deltas of the short options were around 15. The goal on the trade is to make 10% and not lose more than 12% of the risk or margin of the trade, $780. If the delta of the short call or put gets to 23 this week. I will look to either buy a call on the upside or put on the downside to cut my position deltas 1/2 or 2/3. I sold the Credit Spread for $2.20 credit, if it goes to around $1.40, I would buy back the Iron Condor for $1.40 debit, making around 10% on my capital. Join us tomorrow, January 4, for a free webinar at 1 pm central titled: How to Manage a $10K Weekly Portfolio. […]
Tuesday on SOM TV, I put on a live BWB and am talking about the trade today after big move in SPX yesterday.The trade is in Jan 6 expiration and was done with SPX around 2209. Buy 1 Jan 2200 put Sell 2 Jan 2170 puts and Buy 1 Jan 2130 put. The debit was 2.05 and the margin or risk for this 1 unit trade is $1205 dollars, which is the risk on the downside. The risk on the upside is about $205 .I started the trade 1.75 deltas short on this $1200 trade. During SOM TV Tuesday, I mentioned if SPX hit 2223 yesterday, I would look at the trade and probably sell a put credit spread to narrow the upside of the Broken Wing Butterfly. The original Butterfly width was 30 on the upside and 40 on the downside. By adjusting with a put credit spread, selling the 2190-2200 put credit spread in January, we would be decreasing the upside width to 20 and reducing the short delta exposure on the upside. If you didn’t do anything to the trade, the price is now around $1.35 with SPX at 2243 as of 10:09 am central today Dec […]
Most of the live Income Trades (delta neutral, positive theta, selling strategies) that students in our community and myself had on today did much better than expected, and in some cases did great. lets discuss at least 2 of the trades I had on as examples. Trade #1 did absolutely great today, and it was a basic non-Directional trade that made 20% today with the market going drastically against us. The trade was a balanced Butterfly trade in SPX in the August 19 expiration, and the width of the Butterfly was 40.The trade was put on yesterday when SPX was around 2105.The trade was put on using all Calls. Here is the trade using a 1 contract example. Buy 1 2065 and sell 2 2105’s and Buy 1 2145. I bought some units at $5.40, $5.30, and $5.20. A unit could be 1-2-1 or 2-4-2 or 3-6-3, whatever size you are trading at. In this trade, we want the price of SPX to be near the short strike of 2105. Today at around 9:45 am central time, SPX was around $2059 and I got out of my entire trade that I bought around $5.30 and sold it for a $6.40 Credit, a […]
At Sheridan Options Mentoring, we’re proud to offer informational resources for people who are interested in learning more about options trading, options strategies, and more. We’re pleased to announce our annual options seminar, hosted by our very own Dan Sheridan in Chicago. This year’s seminary will take place on June 16th and 17th and will be streamed live. Learn Options Trading Secrets from Industry Experts The live stream of the options seminar will feature presentations from Dan Sheridan, founder of Sheridan Options Mentoring as well as the following speakers: Brian Overby, Senior Options Analyst at TradeKing and author of The Options Playbook Russell Rhoads, Senior Instructor at CBOE’s Options Institute Tom Sosnoff, Co-Founder of ThinkorSwim and founder of TastyTrade Steve Basigo, Veteran Retail Trader Karen Bruton, AKA “Karen the Super Trader” Mark Fenton, Senior Mentor at Sheridan Mentoring and Veteran Retail Trader Jimm Bittman, speaking about credit spreads Dino Karahalios, Veteran Retail Trader Live Stream Our Options Trading Seminar The live stream seminar will get you full access to each session, both days, streamed live in real time. You’ll be able to ask any questions you may have to a moderator on our live chat box, and you’ll have access […]
#1 Learn the Craft This stage takes a while and possibly much longer depending on how you learn the craft. Most folk pick a directional approach to finding trades, and that is a very difficult proposition. We pick trades based on 3 Things: Probabilities, Time decay, and a good plan for each trade. As you learn the craft, a good understanding of the Greeks and the ins and outs of the different strategies is essential. #2 Practice the Craft This stage in my opinion means trading a plan and 30-50 live trades proving and practicing the plan under the tutelage of someone very experienced at Risk Management. That is what we do here at Sheridan Mentoring. I don’t know another mentoring company or coaching service in the Options Trading business that teaches you the business in this manner. This is crucial. Most folks who do 30-50 live trades on their own will usually end up in a heap of trouble! #3 Discipline in the Craft This is where most people “bite the dust”. Our mentors have there hands full with students who come in with many bad habits, including being directional on every trade and not used to following a […]
Over the course of this week, I will be going over several different strategies for SPX in this Volatile Market, and a cash secured put is the first that I will discuss in this post. Even with the rally Friday (Jan 23), the markets are still down considerably in the last 4 weeks. SPX closed Friday at around 1907, up around 37 points for the day! Dec 29, SPX closed at 2078. We are still 171 points away from the Dec 29 close. That’s about 8 ½ % from those lofty levels. With that as perspective, I think cash secured puts might be attractive here in certain stocks. Cash secured puts are the same strategy as covered writes, but not as popular. SPY closed Friday at $190.52 up an amazing $3.83 or 2% for the day. I will use the February expiration in my example. SPY I will sell 1 Feb 180 put for $1.50. If SPY closes above $180 by February expiration, Feb 19, I collect the entire premium of $180. If SPY closes under $180 by February expiration, I obligate myself to buy the SPY ETF at the short strike of $180 minus the premium of $1.50 or […]
Market Outlook: The market closed Friday at 1880, down 200 points or 8-9% in about 2 ½ weeks. The first 2 weeks of 2016 has seen quite a bit of volatility. In SPX, we have had 5 of last 10 trading days with moves of 1 ½ % or more, unprecedented! Translated into net price changes at the end of the day, that’s 5 days out of last 10 where SPX has net moved 31 to 48 points in one day! Total Daily Move The moves are actually bigger if you look at the total daily move taking into account the high and low of the day. Try to keep weekly trades delta neutral in that environment! We basically have had 2 corrections in the last 6 months, first time since Al Capone came to Chicago! Where will the market go next week? Should I stay in my bunker till the market quiets? I don’t think so. If you read enough business articles, this is where names are made. Where fear is rampant, like now, rampant predictions come out from the would be and even the current Gurus .” The market will drop 10% more” or “This is the best […]
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