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!



5 replies
  1. Bob
    Bob says:

    Thanks Dan. I put this trade on yesterday at about 2:23 PM w/ SPX at ~ 2592.5 for a $3.60 DR. I was able to sell the position at the $4 target at about 9:30 this morning after SPX rallied 5 points and then sold off to 2586. Not exactly sure why it played out but happy that it did.

  2. Roberto
    Roberto says:

    Is it better to do this trade for Weds expiration rather than Friday expiration? I would be tempted to have a go at it twice per week for 50 weeks.

      • Roberto
        Roberto says:

        Dan, thank you for introducing this trade. I tried the Friday expiration. Entered the 2575/2585/2595 butterfly for 2.65 late Tuesday just before close, watched it creep towards the high end of the range (compressing my credit to under 2.00) all day yesterday, got whipsawed this morning with the .05% drop in SPX, and still snuck out with .30 credit. This was my first index trade and I am impressed with the liquidity of the marker. Even in a gap down market I got fast execution. Of course, better to be lucky than good, but I’ll be adding this trade to my toolkit.

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