Entries by Dan Sheridan

High Octane 2 Day SPX Butterfly

( From Ally Invest Webinar Today) Buy 1  Nov 8  2580 C, Sell 2  Nov 8  2590 C,  Buy 1  Nov 8  2600 C,  $3.65 Debit 2 Step Risk Management Process ( No Adjustments) #1  Sell  2 ATM Calls and Buy 1 OTM call 10 points up and down from short strike. Enter on Monday morning, expiration will be Wednesday, 2 days further out. #2   Profit Target is about 10% of debit and risk of $365 for each 1 Butterfly. Will sell out Butterfly if Debit hits $4 or higher. Ideally, want to get out today, latest, Tuesday by Lunch. Max loss, would get out if Debit decreased below $3.15. When I exit trade for either a profit or loss, it would be for a credit.  Dan Sheridan   an@sheridanmentoring.com

Live Double Calendar Trade in SPX

Today , around 12:15 or 12:30 central, I did this trade in SPX: Buy 6  Dec 8  2600 C, Buy 6  Dec 8  2555 P, S 6  Nov 20  2600 C, S 6  Nov 20  2555 P, for $16.35 Debit. The long is 35 days from expiration and the short is 17 days from expiration. SPX was around $2586 when I did this. Beginning position Deltas are near zero, the Theta is 38 and the Vega is 1277 ( 6 Contracts). For 1 contract, the capital required is the debit of $1635. 6 Contracts in this example would be about $10,000. Dan’s 4 Step Risk Management Plan 1 Set up : Long Expiration 35 Days out and Short expiration is 17 days from expiration. Start position deltas near zero. Call Calendar is about 15 points up from current price and Put Calendar is about 30 points down from the current price.        2 Profit target and Max Loss: Looking to make about 7-10 % profit and not lose more than say 10%. I bought the spread at 16.35 debit, so I would sell out for around $115 profit for each 1 Double Calendar, or a credit of about […]

Live Credit Spread Trade

Below, is a trade that I put on earlier today in a live webinar for Ally Invest. Sell 1  Nov 24  2605 SPX Call  ,  Buy 1  Nov 24  2610 C,  $1 Credit. SPX at $2571. 4 Step Risk Management Plan Step #1    With SPX about 12 Points off of the all time highs, thought it appropriate to do a Call Credit Spread in SPX. Sold a Call at a 20 Delta and bought a call 5 points further out-of-the-money. The risk is $400 for every 1 spread (risk of $500 minus the $100 credit). I filled this trade live at 11:35 am with SPX trading at 2571. Step #2   Profit Target and Max Loss.  Profit Target is about 10%. We will buy back the trade for .50, half the credit in this example. Max Loss is 15%. If the $1 Credit goes to 2 .00, we will take off the trade for a $2.00 Debit or a loss of $1.00 on the credit spread, down 20%. Step #3  When to Adjust ? and Step #4  How to Adjust?  Not applicable here because we are simply going to take off for a profit or loss and won’t be […]

Live Double Calendar today with 4 step Risk Management Plan

Dan put the below trade on  about an hour ago, live, in a webinar for Ally Invest. Trade: With SPX around 2554 at about 11:40 central,  bought  1 Nov 10  2570 Call  and bought 1  Nov 10  2530 Put, and sold 1  Oct 27  2570 Call and sold 1  Oct 27  2530 Put. Total debit for this live trade,  11.05 . Selling Expiration that expires in 11 Days and buying the expiration that expires in 25 days. Dan’s 4 Step Risk Management Plan for this trade: Step 1– Set up:  Details are up above next to Trade. Step 2– Risk Management: 8% Profit and 10% Max Loss on risk capital of $1105. Will have in order to take off for $11.90 Credit , a profit of about 8%. If spread I paid $11.05 for goes under $9.50 , I would get out of the trade . Note: Beginner Traders would only deal with Step 1 and 2. Once you have done 5-6 Double Calendars and understand them, then I would deal with Step 3 and 4. Step 3-  When to Adjust?  Upside: Short Call strike of 2570 . Downside: Short Put Strike plus 5 points or 2535. Step 4- How […]

Blog Update from Monday

Took off Mondays Live Butterfly today for a profit of around 5% in 3 Days! (You can reference the trade from Monday’s blog using the link below.) https://www.sheridanmentoring.com/butterfly-live-trade-today-risk-management-plan/ Took off the Butterfly for less than my goal of 8-10 % because I am concerned with the narrow range in SPX last 5 trading days and am quick to get out of my short Vega trades a bit early when VIX is so low, today it is at 9.76! We bought the Butterfly  Monday for 12.15 Debit and sold it out today for  12.70 Credit . The Trade was in the Oct 27 expiration. The trade was B 1  2520 C ,  S 2  2550 C ,  B 1  2575 C , $12.15 Debit. Dan Sheridan dan@sheridanmentoring.com

Butterfly Live Trade for today and Risk Management Plan

Earlier today I did a Live Butterfly Trade in a webinar for Ally Invest. Below is my 4 Step Risk Management Plan. Step 1: The Set up:  I did the Butterfly in SPX at about 11:25 am central today, Oct 9, with SPX around $2548. I bought 1   2520 Call,  Sold 2  2550 Calls, and bought 1  2575 Call. I paid $12.15 Debit or $1215 for the entire trade. My beginning position Greeks are: Deltas  -2   Theta 13  and Vega -107. Total Capital and Risk for 1 contract is $1220. The expiration is Oct 27 which is 18 days from expiration.  Why did I do this? For monthly Income. How does this trade make money?  The short options I sold , they decay quicker than the options I bought. ATM options decay faster than ITM or OTM options. Step 2:  Profit Target and Max Loss:  8-10% Profit. If I make around 8% on this trade this week, that’s about $100. So if I paid $12.15 debit, my goal is to sell this out for around $13.15 Debit.  My Max Loss is 10-12% of the cost of the trade. So if I want to exit the trade at 10% […]

Backspread live trade

In today’s Webinar for Ally Invest ( previously Trade King), which we do every Monday at 11 am central, the trade today was a Back spread or Back ratio trade. With SPX at $2472 , I bought 2 Sep 1 expiration  2535 calls and sold 1 Sep 1 Expiration 2510 calls for $1.80 Credit. I like these type of trades when SPX is near all time highs and VIX is 11 or under. Live Trade This was a Live trade. I executed this trade by doing a credit spread and then buying the extra call. I like to keep the position deltas near zero or a little long at the onset to combat the Volatility risk of this long Vega trade on the upside. My position Greeks right now  with SPX at 2473 are: Deltas  -5.46   Theta    .61      Vega  -3. This is an OTM Call back spread  that starts out short Vega but picks up quite a bit of long Vega on the upside from the extra long call. Deltas I would of rather started out position deltas near zero or a tinge long but this is OK for now. I hope to buy this spread in […]

Cash Secured Put in IBM

Trade: IBM currently at $153.40 Sell 1 IBM July 28 Expiration 150 Put at $2.00 (Short Put is 34 Delta and IV 22) Analysis: Stock has been in a range over the last 12 months of 147.79 and 182.79. By selling the 150 Put at $2, you are committing to buy the stock at expiration at $148, if the stock is under $150. Earnings You would be buying the stock at about the lows over the last 12 months. Because IBM Earnings are coming during the week of July 17, we get a little more premium than usual for selling a 21 Day Put that is about 3 ½ dollars out-of-the money. Expiration The 34 Delta of the short put simply means that there is only a 34% probability we will be below $150 in IBM at expiration. What if you don’t want to buy the stock at expiration under $150 because of the big capital outlay of owning the stock? Then I would just have an order  in to buy the put back for $ 4 ½  if IBM has big down move. Since my credit is $2, I would be trying to limit my loss to not much […]

Live Trade for today: Call Credit Spread in SPX

With SPX currently at $2393, about 12 points from the all time highs, I am looking at a Call Credit Spread. I am looking at a 24 day trade in the June 16 expiration. Sell 1  2430 Call and Buy 1  2440 Call for an $1.90 Credit.  Just filled this trade   live at 11:35 am central time with SPX at 2393. The Delta of the short call is 20, that means there is only a 20% probability that SPX will finish over the short strike of 2430 in 24 Days. The margin or risk on this trade is $810. Credit Spread I am looking at making around 10% or around $80 on my risk capital of $810 for every 1 contract. I will have an order in to buy back the credit spread at $1.10 Debit as a profit target. If SPX continues up, I will have an order in to buy back the spread at 2 times my profit target of $80. So I will buy the credit spread back for a loss if the credit goes from the initial $1.90 credit to $1.90 plus $1.60 or $3.50. Always have a Plan before you start each trade! The position […]