I put on the below trade earlier today in a webinar with AllyInvest. Trade: High Octane Butterfly trade Buy 1 SPX Nov 29 2590 C, S 2 Nov 29 2600 C, B 1 Nov 29 2610 C, $3.15 Debit Risk Management: I would sell out the Butterfly for $3.50 or higher, about 10% yield on every 1-2-1 Butterfly. If the Debit goes under $2.80, would get out. Would get out of trade by 10 am central tomorrow at the latest. Dan Sheridan dan@sheridanmentoring.com
Took off the trade I bought about 1 ½ hours ago for $11.90 Debit for a credit of $12.40. Why was I able to do this? SPX dropped from our short strike of $2590 to $2585, and we were short about 4.3 Deltas for every 1-2-1 Butterfly at trade initiation. Dan Sheridan dan@sheridanmentoring.com
I put on this trade today around 1:20 pm central time in Sheridan TV. I bought 1 2560 C , S 2 2590 C, B 1 2615 C, for an $11.90 Debit. SPX is trading at $2589 and I am trading the Dec 1 Expiration, 15 Days out. 4 Step Risk Management Plan Step #1 Set Up: Sold ATM Call 2 times, Bought the ITM call, 30 points lower than the ATM call, and also Bought 1 call 25 points higher than the short call. My beginning position Greeks are about short 4.34 Deltas for every 1-2-1 Butterfly. Shorter than I normally do , but with the market so high already today , I decided to be a little shorter when starting. This just means I would adjust quicker on the upside than the downside. Step 2 Profit Target and Max Loss- 8-10 % profit and 10-12% Max Loss on Capital in this example of around $1190, my debit. Would have order in to sell Fly for $12.80 or $12.85 for profit. If the Spread value went under 10.70, would get out Step 3- When to Adjust? Downside: 2570. Upside: 2600 Step 4- How […]
With SPX at $2588, I put on an SPX Double Calendar. Here is the 4 Step Risk Management Plan Step 1: Set Up: B 1 Dec 8 2600 C, B 1 Dec 8 2560 P, S 1 Nov 24 2600 C, S 1 Nov 24 2560 P, $15.20 Debit. Short Strikes 17 Days from Expiration and Long Strikes 31 Days from Expiration. Started my Call Calendar up about 12 points from the current price. Put Calendar was 30 points below the current price. Profit Target Step 2: Profit target and Max Loss: Profit Target 8%, would sell out Double Calendar for $16.40 Credit. If the Debit of the spread goes under $13.80, would sell out Double Calendar for about a 10% loss at $13.80 or $13.70 Credit. Step 3: When to Adjust? Upside, around the short strike of the calls. Downside? Would look for a possible adjustment the first 2 days of this trade, about 10 points from the short put strike. Step 4: How to Adjust? Upside? Take off the Put Calendar Downside? Take off the Call calendar
In yesterday’s Live Trade for Ally Invest, I did a 2 Day Butterfly for $3.65 Debit . Normally I like to get out of a 2 day trade the day I put it on. Today, SPX is around 2595, and I don’t like to carry these trades past the morning of the 2nd day, risk goes up quite a bit. I sold out the spread around 9:10 am central today for $3.60 Credit , very small loss of $5. Kenny Rogers used to say, “Know when to hold them and know when to fold them”. Can check original trade details by scrolling up to yesterday’s November 6 Blog. SPX If SPX is trading at 2598 by the end of the day today, only 3 points higher, the spread could be trading for $3.00, down 20%. The least risky time to navigate through this trade with a good risk/reward scenario is the first day. Strict Risk Management Remember, the way we trade is to do similar trades every week with strict risk management. I am looking to do this trade over 50 weeks in a year, and I need to keep my losers very small and less than my winners. If […]
With SPX at 2591 at 11:48 am central today, took off Double Calendar Trade from Friday for $17 credit, about 4% yield. Why did I take off the trade early? Got a little impatient with this quiet market that I don’t think will last, and a 4% profit in 1 trading day. Got into the Double Calendar Trade Friday for $16.35 Debit. How did it make 4% in 1 Trading Day? Daily theta on this trade was almost $60 for 1 contract, benefit of doing a 17 Day Trade. For more details on original trade, scroll to Nov 3 Blog. Dan dan@sheridanmentoring.com
( 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
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 […]
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 […]
Dan just closed his Monday SPX Double Calendar trade for a 12.40 Credit on Thursday morning at 8:35am Central Time. He closed his trade for a 12% profit.