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Okay. We took a look, and we did our daily review of our trades. We found that 2 out of 3 of our positions were doing really well. The one position that is not doing very well is this IWM position.
We set this up a few days ago. If we take a look at our charts here, I’ll take a look and see what IWM did. We put our positions in down here, around the 69 level, and look at it. It has just shot up like crazy. It has gone up to 71, and today, it leapt up another point here.
We’re coming right into resistance, here. There might be some resistance, and it might blast through there. Who knows? We don’t like to predict price. All we can tell is that it’s starting to go up a little bit. It may take a rest here eventually, but it might get up to the 74, 75, 76 level.
What we want to do is, we want to take a look at our position, and look at some potential adjustments. I have gotten a couple ready. It looks like you could… Let’s say we put on a call calendar. What does that do to our position?
It does spread it out, that’s for sure. It does extend our breakeven on the upside all the way to about 75, almost 76. It certainly does lower our tent down on this side, doesn’t it? This doesn’t look too good. If we do have a pullback here, we are going to be in a bad position on the other side of this trade. If we do go up to around 74, 75, we’re going to be looking good. The problem is, of course, that we are really bad at trying to determine the future.
I have a 70 put calendar on the other side. What we’re going to be doing is creating a double calendar. We are going to be putting a double calendar on top of the double calendar that we already have. What does this do for us?
Actually, it gives us a little more profit potential. We are adding a few more contracts. If we look in the center of our tent, our maximum profit at expiration is $347, on the number of contracts that we currently have. If we take those off, the profit in the center of our tent here is only $252. It does add a little bit of additional profit potential to our position.
What it also does is it extends our breakevens, to about 75.5, and on the downside, we’re right around 68.5. Remember, we took a look at this position here. If we run up into the 75, 76 level, considering if we do get through this resistance level, we may run into this 200-day moving average, right around 75.
That’s not too bad. We could handle that. If we’re getting close to expiration, we’re up around that 74, 75 level, that will give us about $500 in profit on expiration. We’ll probably take our position off at about 30-40% of profit, there. That will be about 250-300.
If, for whatever reason, we decide – you know, the market decides to go down, our breakeven on this adjusted new double calendar that we’re laying on top of our other position, our breakeven to the downside is about 68.5. If we take a look at our graph here, we’re right down at the bottom of this little consolidation period here. It’s also below this blue line.
This blue line is our new channel line, that I started drawing way back here. It looked like – because these points were support points on the way down – and then some of these became support down at the bottom here. I have a couple of price points here, where I can actually draw a line on them. If we do follow this blue line, if we fall back down into the 68.5 level… That is potentially there, but it’s also a support area. We could bounce back up again.
That’s what we’re going to do. That’s how we look at this. We want to look at the resistance points on the upside. We want to look at the support points on the downside. If those line up pretty well, we can adjust, so that we’re back in the center of a profitable position, with our double calendars.
Even though we’re laying over, we have a double calendar on already, we’re not going to touch that. We’re just laying over another double calendar, because of this huge price move that we have just had here. It went up from 69, all the way up to 71. For the IWM, that’s a pretty good move.
That’s how we’re going to adjust this position today. Remember, this is what it looks like without the adjustment. We’re way down here, in negative territory, getting very close to our breakeven. We don’t want to wait until after it’s gone through our breakeven to make any adjustments.
We want to start looking at adjustments right around this breakeven, on either side of it. You can go maybe a point beyond it, but you don’t want to be way down here before you start making adjustments, because it’s too late then.
That’s how we’re going to make our adjustment today. We put on another double calendar that we’re laying on top of the double calendar we already have, because of the huge price move. We’re looking good.
That’s it for today, guys. This is how we’re adjusting a double calendar, by laying another double calendar on top of the one that we already have. That is one adjustment that you can do with a double calendar.
There are other adjustments that you can do. Take a look at the Adjustments CD for other adjustments, but this is the one that we’re going to be doing today. It looks like it really makes the most sense for this position. It extends our breakevens on either side, and puts us back into the center of our tent. That’s what we’re going to do.
Stay confident, guys. Trade with confidence, and I’ll talk to you in the next video.