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.