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.
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!