Well sometimes the market will not cooperate. We had a target of of $1500 on the January 55 day trade and this could have easily been hit with a little pullback on RUT last Friday, but since by midday it looked like this was not going to happen and it was the Friday before expiration and we were up $1000, I decided to take the money. So the Trade ended up with a maximum investment of $5595 and a profit of $1000 which is a 17.8% return on investment. Not the 30% we were looking for but not bad either.
The 30 day method 1 is still open and at this point we are more into loss control than worrying about a profit. Because we are running into expiration week and we were getting close to out adjustment point, I adjusted it early. Once you get this close to expiration, it gets increasing difficult to adjust these. One thing you can do to adjust this late is to buy very narrow otm butterflies really cheap to roll your shorts away form the market. So what I did was to buy 2 – 650/660/670 call butterflies which was the most efficient way to roll my shorts back. This just happened to put our expiration graph in loss territory. To correct this I rolled the 580/600 put vertical up to 610/630. This fixed our expiration graph, flattened Delta and gave us more upside room. The only challenge is that it puts us at a high risk for a whipsaw so it is only done as a last resort. The position as of Friday was down about $575. By Monday open, if there is not a large price move, the position should gain quite a bit. Max loss is $900 so we should be able to withstand a 10 point or so move in either direction on Monday and as for a profit target, if we can get out at better than break even, we’ll be doing well. Here is what the position should look like before open on Monday.
The 30 day method 15 was adjusted Friday also, I sold one of the 580/630/680 butterflies and rolled it to 600/650/700. This flattened our Delta out at the expense of hurting the profit potential so we will need to lower the profit target to $1000. Friday the position was at about break even and by Monday should be up $400 to $500. Here is the graph for Monday AM.
The 55 day February trade is now down $68 which is expected at this point in the trade so no issues there. The trade will be adjusted and/or added to in the next few days if the market either stays at these levels or goes up.