Entries by Dan Sheridan

Live AAPL Butterfly Trade

B 1  Jun 1  182.5 Call,  S 2  Jun 1  187.5 C,  B 1  Jun 1  192.5 C,  1.84 Debit.  Margin and Risk  $184.  11 Day Butterfly Trade. Filled at 12:09 PM CT, with AAPL at 188. Profit Target : 20% or $35 for every 1 contract. Sell out Butterfly at $2.19 Credit. Max Loss is 20% or $35 for every 1 contract. If Butterfly price goes from 1.84 to $1.49, get out. Why am I trying to get 20%?  Because 10% Profit target for every 1 contract would be only $18, and after commissions , there wouldn’t be much less. This is a very cheap dollar trade, only an outlay ( debit) of $184 for every 1 contract. Dan Sheridan  dan@sheridanmentoring.com

Live Double Calendar in SPX

Double Calendar  B 1  Jun 8  2750 C,  B 1  Jun 8  2690 P, S 1  May 25  2750 C, S 1  May 25  2690 P  16.30 Debit Profit target: Sell Spread at 17.45 credit for about 7% profit. Max Loss when Spread decreases under 14.80, loss of around 10% Dan, covered the trade in more detail in the video below.

How to Cheaply Trade Cash Secured Puts in a Retirement Account?

Trading Cash Secured Puts or Covered Writes, basically the same trade, is outrageously expensive in a retirement account. With FB at 165 today, Buying 100 shares at 165 and selling one 170 call at $4.50, expiring in 32 days, cost’s about $16,000 to trade!!! If doing an almost identical strategy called a cash secured Put, selling one 160 P at $4.50, the capital requirement is still going to be near $16,000. How do I do this type of a strategy in a very cost efficient way? Sell a wide put Credit Spread. Using FB as an example today. With FB at $165, I can sell the 160 Put at $4.50. Because the capital requirement is very high to sell the put naked, even if I have the capital too do it, I will look to buy a put against it at 15% the cost of my short put. My short put is going for 4.50, 15% of 4.50 is about $65, so look to hedge the short 160 put with the 140 Put . The May 18 expiration 140 Put is currently trading for .65. Now I have a 20 wide put credit spread, short the 160 Put and long […]

Live FB Pre-Earnings Calendar Trade

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

Live Iron Condor in BABA

Currently trading at $187, the stock has been in a range between roughly 170 and 200 since Mid August, about 6 months. I put on an Iron Condor today. Sell 1  Apr 6  207.5 Call,  Buy 1  Apr 6  212.5 Call, Sell 1  Apr 6  167.5 Put, Buy 1  Apr 6  162.5 Put,  Total Credit  $85. Margin or risk for 1 contract is $415. The expiration of April 6 is 31 days from today. Looking to buy in the spread around .30  Debit.  The profit target would be $55 on capital of $415 for 1 contract, or a yield of 13%. If Baba goes against me price wise, I will close out the Iron Condor if the spread price that I sold for .85 credit, trades over $2. Dan Sheridan dan@sheridanmentoring.com

Live Iron Condor Trade

18 Day SPX Iron Condor Live Trade put on around 11:30 am central today when SPX was about 2715.  S 1  Mar 23  2805 C,  B 1  Mar 23  2815 C, S 1  Mar 23  2575 P,  B 1  Mar 23  2565 P, $1.70 Credit, Margin $830. Delta of short put and call at trade entry was  12 and 13. Plan is to make 7-8% of $830 and not to lose more than 10% of $830. As of 2:43 central today, SPX has run up to 2727, up 36 for the day. The spread is trading at around $2 right now, we are down 30 divided by 830 or 3.6% now. Would look for possible adjustment when short call delta hits around 19, right now it’s at 16, with SPX at 2726. I might roll up my short calls 5 points  at an adjustment point as a possible adjustment. Dan Sheridan dan@sheridanmentoring.com

Update to Monday Blog on High Octane Butterfly

Closed High Octane Butterfly from Monday near the close yesterday for a credit of 1.50 Credit. The loss was very small, $5. I originally bought the Butterfly Monday for 1.55 debit. The original Butterfly was B 1 Feb 28 2755 C, S 2 Feb 28 2765 C, B 1 Feb 28 2775 C, $1.55 Debit. Why did I take it off yesterday? Yesterday, SPX traded up to 2789, over 20 points away from our short strike of 2765, not good with a 2 Day Butterfly! When the market backed off strong yesterday towards the close, I had the opportunity to take it for almost Breakeven and did so. Why did I wait till yesterday to get out when my plan on the Blog Monday was not to stay in the trade Monday for over 2 hours? Because I only put 1 contract on, $155, I got sloppy and didn’t follow my strict risk management and stayed in longer than I wanted to , looking for a profit. I got lucky yesterday when SPX backed off but always want to follow my plan! Dan Sheridan dan@sheridanmentoring.com

High Octane Live Butterfly

At 11 am central today with SPX at 2765, I bought 1  Feb 28  2755 C, S 2  Feb 28  2765 C,  B 1  Feb 28  2775 C, for $1.55 Debit ( Margin/Risk  =  $155 for every 1 contract). Game Plan is to sell it for $1.85 Debit or 20% profit. I will only stay in this trade till 1 central time today or if SPX hits 2755 or 2775, whichever comes first, at that point , will exit trade.   Dan Sheridan dan@sheridanmentoring.com

Blog Update from Monday’s Live SPX Iron Condor

During a Webinar for Ally Invest Monday, I did an SPX Iron Condor for $1.70 Credit. Details on the trade are in Monday’s Blog titled “Live Iron Condor Trade”. Today I took the trade off for a debit of $1.25. The net profit was $45 for every 1 Iron Condor or a yield of 5.4% in 2 days. With the market relatively stable in the morning today and the VIX dropping almost 4 ½  points  , I got the opportunity to take it off for good profit today. Dan Sheridan dan@sheridanmentoring.com

Live Iron Condor Trade

With SPX at $2659  +40 Points, I did an Iron Condor in the Mar 29 Expiration, 45 Days out. Sell 1  2830 Call,  Buy 1  2840 Call,  Sell 1  2370 Put,  Buy  1 2360 Put. Total Credit $1.70, Maximum Risk and Capital allocated is $830. (Trade was discussed earlier today in a webinar with Ally Invest) 4 Step Risk Management Plan #1  Set Up:  Picked Short Strikes by Selling a 12 Delta in the Calls and Puts. Expiration is 45 Days out from Today. #2  Profit Target and Max Loss. Looking to make 8% on Capital or risk of $830,  that would be about $65 per every 1 Iron Condor. I would have an order in to buy back the spread at  $1.05 Debit. If the market goes against me, don’t want to lose more than 15% of the $830 Capital or about $125. So if the spread expanded to $2.95 from the initial $1.70 credit, would get out. Why am I willing to lose 2X what I am hoping to make? I don’t want to lose more than I make, but to give the probabilities time to work, I have to give myself more room before I adjust. Steps 3 […]