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


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


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 Sheridanmentoring.com 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!