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Normally, when you see Delta either at extreme levels, like over 100 – 300, and Vega is at 200 or 300, plus or minus – then you’re probably going to be in a position where you need to make an adjustment.
At these levels, they’re not bad. These are fairly neutral positions. You are only short 35 shares of shock, as represented by Delta. You’re long 53 shares of Vega, which is not too bad. You’re collecting Theta of $35, $36 a day.
What you really want to take a look as is if any of these overall totals on your portfolio start to get dramatically out of line. Sometimes, that can happen, the closer that you get to expiration. That’s why we like to close out positions around 7 to 10 days before expiration.
Theta, however, is the most important. That’s really where we make our money. Once we get closer to expiration, you will see Theta change. If Theta should change dramatically – say, if it went from $35 a day down to $2, $3, or $4 a day, then that is the time that there is very little profit left in your position, and you can close it out.
You can also think of this position statement as control panels, like on an airplane. If any of these controls are drastically off course, you want to make a course correction. If one of these is dramatically off, you really have to take a look at what individual position is throwing that control off, and then possibly make an adjustment on it.
We can also go in, as we normally do, and take a look at our individual positions. I like to run through each one of these. I go from “Single lines,” to the “Expiration +1” lines, so that I can see where we are, in relation to our overall profit position.
We are still in relatively good territory, with our Diamonds position. We are slightly off center. However, I think we are in a good position, because we still have plenty of upside room. We don’t need to make any adjustments on this position today.
On our EEM position, we’re still looking very good. We are actually right at the center of this. We are right at the center of where we need to be, as far as profitability on the position. We are getting the actual maximum amount of profit on this position on a daily basis, at this price level.
We also have plenty of room on the upside and the down-side, so we don’t need to make any adjustments on this position today.
Our SPY position is also doing very well. We’re starting to get like the Diamond position, just slightly above center. As noted, if we take a look at our Monitor here, we are short Delta. That means that if prices go down, we make an additional $28 today.
If you take a look at our Analyze tab here, if we go down – yes, in fact, we do actually make additional money. If we were at the $137 price level, we would be making close to $71 today, in profits.
In relation to our expiration, we still have plenty of room to go, as far as profit potential on this position. We have plenty of up-side price and downside price movement that we can take in our position. We don’t really need to do any adjustments today.
Our final position is the IWM, which you may have seen in other of these daily adjustment and review videos. It was trading way down here, at the 70 level, and now has moved up toward the center of our profit tent, in our picture here. We are doing very well on the IWM.
Remember that I have reviewed the VIX. You can tell that we had some resistance on the VIX, around the 25 level. We were just above 24, before it started moving down. Remember, when it started moving down, the prices of stocks went up.
We are now trading in between this level of 22. I think we can probably go down into the 17 or 18 level, which means stock prices will continue higher. At that point, we may go back up again.
The VIX does give us an idea of – it’s a little bit more of a reliable indicator of future price movements of stocks. Remember, it moves opposite to the market. When it goes down, stocks go up.
That’s how we take a look and review our trades, based just on our position statement. We are starting to get into profit, now. We are getting closer to expiration; we’re about 22 days away from expiration on our positions. We are starting to realize the benefit of these types of positions, because we are collecting that Theta. We are starting to get into a profitable position on a daily basis, with our positions.
That’s exactly what we like to see. We are on course, and no corrections or adjustments are necessary today. Okay, guys. Trade with confidence.