TSLA Pre-Earnings Calendar

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 manage a 10K Weekly’s Portfolio. This interactive class spans 4 weeks and meets twice per week. All classes are recorded. Sign up on the front page of Sheridan Mentoring and we will see you at 1 pm central tomorrow.

Thanks

Dan Sheridan  dan@sheridanmentoring.com

1st Trade of the New Year- Iron Condor in SPX

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. Sign up on the Sheridan Mentoring home page.

SPX Put Broken Wing Butterfly

Loss of mobility and degenerative health loss concept and losing freedom from mobiliy due to injury ormedical disease represented by a monarch butterfly with broken and fading wings on a white background.

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 8. If somebody did nothing, they would be down $70 right now divided by $1205 of capital or about 5 1/2% today after huge move yesterday. Not bad but the key is risk management. If someone dealt with this yesterday at 2223 which I mentioned as adjustment point, you’d be singing  in the rain like Fred Astaire. Key point: when you adjust is more important than actual adjustment. 

Thanks,

Dan Sheridan  dan@sheridanmentoring.com