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.

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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 and 4 talk about When to Adjust and How to Adjust, a little more advanced topic, so for this  Iron Condor , I will keep this simple and just give a plan of where I would take a profit and where I would get out for a loss.

Dan Sheridan

Note: Tomorrow at 11 am central starts a new 3 week class at Sheridan Mentoring:  Trading Double Calendars in an Volatile Environment. This has been one of the most successful strategies in Sheridan Mentoring over the last 5 months, and we will spend the next 3 weeks discussing how to manage and trade this strategy in a more volatile environment. Go to for more information. All classes are recorded and archived.


High Octane Butterfly Trade

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

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Blog Update from Today’s Live Butterfly from earlier today

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

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Live Broken Wing Butterfly Trade

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 to Adjust?  Roll the short call up ( upside adjustment) or short put down (  downside adjustment), by 5-10 points to reduce the position deltas 2/3.

  Dan Sheridan

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Weeklies Asymmetrical FLY

With the slight volatility spike today an interesting trade to enter would be an at the money asymmetrical fly. The trade would benefit from a drop in volatility once entered and also from rapid time decay. Looking at a possible trade entry as below:

SPX November 24th expiration
Buy 1 2535 put
Sell 2 2575 puts
Buy 1 2600 put

Look to enter around $5.50 to $5.60 debit per spread
Cost of trade is debit plus margin. Close at 10% profit or 10% loss based on the cost of the trade.

Mark Fenton

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SOM TV Live Trade Today

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

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Live trade update from Yesterday’s Blog

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.


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.

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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 I win 38 and lose 12, and keep my winners less or equal to my winners, it will be a very good year!



Update for Live SPX Double Calendar Trade from Nov 3 Blog

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.


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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

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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 $17.50 for the Double Calendar. If the Double Calendar Debit starts going under $14.75 debit, would get out for a loss of around 10%.

       3  When to Adjust? Would look for a possible adjustment at either the short strike on the call side, 2600,  or 10 points before the short strike on the downside, that would be 2565.

        4  How to Adjust?  On the upside, I would take off enough Put Calendars to reduce my position Deltas ½ to 2/3.  On the Downside, I would take off enough Call Calendars to reduce my position Deltas ½ to 2/3. If the SPX was up or down close to 1% in the SPX at the time of Adjustment, would buy a put or call to reduce my position Deltas ½ to 2/3.

Note: Beginning Traders or those who haven’t done 10-12 Double Calendars live, keep it simple and only do Step 1 and Step 2, that would mean you are doing no Adjustments.

Dan Sheridan

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