Go to http://ExpertOptionTrading.com/videos for more free videos on equity options. Okay, guys. Here's a perfect opportunity to show you how to adjust a trade. Let me just show you where you are. We have had a tremendous run on the Dow Jones Industrial in the last couple of days. We are up to 156, and then we went up just a point or two yesterday. We didn't do much. But now we are up significantly today. In fact, the Dow is up almost 200 points. So, we put our positions down here. We have had a tremendous run-up. This is on our iron condor. We were short calls, and we were long calls up here. Our spread, when we put it on, was about 40 cents. Now, we're getting killed. It's about $1, so we're losing 60 cents on that. This is where knowledge comes in, and understanding what you can do with your positions. This was a resistance level. We blasted through that. We'll probably go back up and hit this 13,000 level, which is the next major level that I've seen. We have our position on the SPY, so let's take a look at the SPY for a minute. A gap opened down here. We had a big up day. We had put our position in, down around here. Then we had another huge gap open here, which is right against one of our resistance points, right here on the SPY. Whether or not this is actually going to hold, or pull back or not, I have no idea. At this point, I don't try to predict price. We just try to manage our trades. On the SMP, the price level that we want to take a look at is right in here. We have a little bit of room to move, up around the 1400 level, before we start to see some pain. In this position, we are short the 139s, and we are long the 141s. Right now, they're trading at 106. We have lost about 55 points on that. This is where adjustments are so critical. We can roll our position up to the 143, 145 position. We're going to take another 53 cent credit here. I can show you what that will do to our position. What it will do here is, we're just going to roll that position up. We're taking these two off, and we're putting on a higher credit spread. What that does, is it just extends our breakeven point, all the way up to 144. 144 would bring us just above this 1400 level. We could bring it right back up there. It doesn't hurt our position. Our breakeven is right here, at about 139. We can get back into the position, with almost the same breakeven. We are able to maintain our position, and our profitability, and extend our breakeven out to 144. You don't really have to get hurt, if you know what to do ahead of time. That's why I always say, "Trade with confidence," because knowledge is power, in this business. We lost 50 cents so far, in this position. We are just going to roll it up to the next credit spread, just up and out a little bit farther, and take in some more credit. We're going to maintain our position that way. That's what we're going to do. That's how you adjust a position that is going against you. This is on an iron condor. That is how you don't get hurt. You lost 40, 50 cents on this one, but you're getting the credit back on this one. If necessary, if this market continues to run up, we will continue to roll this position up, so we don't get hurt before expiration. That's all you really have to do. You sell that as a loss of 50 cents, but you are gaining a 50 cent credit on this one. It's really a wash. We rolled our position out, and now we are looking a little bit better. Our breakeven has moved up to about 144. Our price is at 138. We have quite a run here that we can go through. And we actually took a little profit in. We have $80 in profit here, and our graph is looking really good. All we did was close out the shorter position, as I showed you - the short vertical spread. We rolled it out for a credit to the higher spread. That's how you don't get hurt. If you know what to do, you can spread out your breakevens. We can tighten this up a little bit, if we want to. For more videos on equity options be sure to check out our channel: http://www.youtube.com/user/howtotradeoptions To learn more about the Expert Option Trading course go to: http://ExpertOptionTrading.com Additional Tags ================ vertical spreads, options greeks, what is options trading, option volatility, option spreads, options volatility, how to trade in options, option strategies, index options, virtual trading, options spreads, virtual options trading, options trading tutorial, option trading strategy, options trading course, how to trade stock options, options trading systems, options training, learning options, learn to trade options, option trading tutorial, options trading strategy, option trading course, option trading systems, options trading basics, option trading basics, option trading system, options trading courses, options trading training, trade options, what is a stock option, options strategies
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Duration: 6m 37s
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