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.
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