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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The Time Bomb Butterfly

A few years ago I wrote an article for the Modern Trader Magazine on “The Time Bomb Butterfly“. I reference it again because I think it is a good trade for those looking for an interesting spec trade. You can check out the article below, and hopefully the trade can be of help to you as you try to take advantage of earnings opportunities.

Mark Fenton

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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 dealing with adjustments for this trade.

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Closed this Monday’s trade for a profit of 12%

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.

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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 to Adjust? Upside: Take off Put Calendar.  Downside:  Take off Call Calendar.

Dan Sheridan

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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.)

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

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