 Hey everyone! Welcome to another video lesson from Navigation Trading. In this video I want to show you how we were able to take a losing short strangle and turn it into a winner. The trade that we're looking at we put on in symbol XRT which is the S&P Retail ETF. So this is a trade that we put on on November 21st, 2017 and that's indicated by this little highlighted bubble and you can see on the chart every highlighted bubble is where we made another trade or adjustment throughout the period of time when we were in this trade. So we were in this trade from 1121 of 17 and we closed out the trade completely on April 17th of 2018. So we were in the trade for a decent amount of time and the reason that is is because look at this massive move that happened in the ETF right after we put it on. So we put it on right here, few days later had this huge pop higher, added another trade here, made some adjustments all along the way and you know I mean this thing went from about $41 all the way up to $49 before coming down and then starting to consolidate. So this is a this is a huge lesson to understand of how to manage a trade when it goes against you because not every trade is going to be one of those that you just put on and take off as a winner. You've got to know how to manage these trades from beginning to end and the difference between a losing trader and a winning trader can be the difference of if you know how to manage and adjust the trade mechanically and properly. So I'm gonna go through this from beginning to end. If you're a brand-new trader and you've never made an adjustment or you haven't traded a short strangle, you may want to turn this off and come back to it when you're a little bit more experienced because we are gonna get in the weeds a little bit on this but for those of you who are trading short strangles and are a bit confused on why we adjust the way that we do or how to adjust and you want to see kind of the big picture of how we turn a losing trade into a winner then make sure you watch this entire video and go back to it if you have questions or you didn't quite pick up something the first time you may want to go back and do it again because this is so powerful and this is like I said this is the difference between a losing trader and a winner and it's learning how to manage the losers and get back to profitability. Alright so let's jump in. So the first thing I want to look at is if we go into our members area at navigation trading this is what you'll see in the closed trades section and this is in XRT. So you'll see that every trade is documented from beginning to end we just simply copy and paste these directly from our broker onto the platform so you always have exactly what we've done all along the way and as you can see we started on 1121 and then we ended up closing out of the entire position on 417 for a total profit of $307. Now you might be thinking big deal $307 and you were in the trade for months how is this a good thing? Well the reason it's such a powerful thing is such a good thing is the fact that we when we first put on the trade the ETF completely went against us it exploded to the upside like I like I'm showing in this chart I mean it made a huge move to the upside a huge one directional move remember when we're putting on strangles we like price to stay in a fairly consistent range to make money on that trade but if you have a huge massive move that's when you've got to learn how to adjust and manage that trade. So from the beginning we ended up entering with a short strangle with four contracts and then what we did on 12-4 after we had a huge move is just like we teach in our strangles course is that we added another one so we added another one and we did this one for three contracts okay so now we had two separate positions on on 12-20 which I'm gonna flip back and forth to the chart on 12-20 we ended up because we had this big move up here we ended up rolling our puts up so when we have a breach of our short strike to the upside we roll up the untested side so we rolled up our puts up to collect more credit and to continue to give ourselves more time to be right then we did an adjusting close where we bought back the three contract strangle booked a profit on that piece so we sold it for 70 bought it back for 35 so that's a 50% of max profit on that piece of the trade then the next day we ended up opening another one so we sold another strangle for three contracts so we're constantly opening trades booking trades adjusting rolling as needed until we get back to profitability if we had just put on this trade and then the trade goes against us and we took it off we would have ended up booking a loss of about $600 okay so we went from a $600 loss back to a $300 profit and one of the keys key things to remember is look at where implied volatility is this whole time during the trade we put this on implied volatility IV percentile was at about 60 and then it popped up and it stayed relatively high all the way through the trade so if we weren't already in this trade to begin with anywhere along this this time frame you could put a trade on because we had high implied volatility meaning the options were expensive which is a good time to sell those options okay so we wanted to be in the trade so we continue to adjust and close adjust open we needed to roll so we rolled this from January to February as you can see here then we made on 124 we made it another adjustment roll where we rolled from February to March on 131 we did another adjusting roll where we we went from February to March as well so again we're managing these two different positions one has four contracts one with three and sometimes I'll do that on purpose so that we have just one contract difference so it's easier to track so I like to track each trade within the position separately just to keep everything straight and so by doing that we did four contracts on this one three on this one and we continue to manage as such on 215 we bought back this strangle for 502 so it ended up actually taking a loss on that piece but continue to manage our one with three three contracts and then on 321 329 we opened another strangle with with four contracts to continue to manage these on 42 we did another roll where we rolled from April to May as you can see here on 413 we did an adjustment close where we bought back that strangle and then on 417 we bought back our other strangle and close the entire thing out for a total profit of 307 now again I went through that really quickly all of these adjustment techniques we go through step by step in the course if a if one of the sides of our strangles gets tested we roll up the untested side once we get to down to around 21 days to expiration we roll out to the next expiration cycle to collect more credit and give ourselves more time to be right so after all those adjustments you know one of the questions you might have was well how did you come up with that total profit can you can you walk us through from beginning to end how to calculate this to make sure that we understand what we made on the total trade from beginning to end and so what I've done is I've just put together a really simple spreadsheet because this literally is all you have to do to calculate this so it might sound complicated at first and when you're first learning how to trade these strategies it can be complicated so I don't want to minimize that but but I want to break it down and make it as simple as possible to show you how easy it is so all we're doing is I put on the spreadsheet XRT that's the symbol we're trading and I made two different columns one with three contracts and one with four okay so if if you're trading with with multiple number of contracts and you have a couple different positions going on you want to do you want to make columns for each of those depending on the number of contracts and then all you have to do is take the the ones that you sell because when you sell we're collecting a credit so you can see with this one with four contracts we sold for 83 cents boom you put 83 cents right there under four then we've got one with three contracts and we sold that for 70 cents so we put 70 cents here then we did an adjusting roll where again we sold so that's a credit of 52 cents under four contracts so we put that here then when you do a buy that is a debit okay so that's a debit of 35 cents so we put that here as a negative number so negative point three five negative thirty five cents okay that's and that's under three three contracts okay so you and you just go down the line and if you sell when you're doing a strangle you do that as a credit and if you buy you put that in as a debit so then what we do is when we get to the end we've closed it out we add up all of our debits and credits on the three contracts we had a positive 277 and then on the four contracts we actually had a negative dollar 31 okay so then what we do is we we can break out our calculator here and we can say okay let's add all these up add it up to 277 so if we take 277 2.77 and then remember we got to multiply that times a hundred because each contract represents a hundred shares so that's 277 dollars then you've got to look at okay how many contracts did we trade in this case we traded three contracts so you multiply that times three and that equals 831 dollars so in all the trades that we're making with three contracts that adds up to a profit of 831 dollars and then on this column with four contracts that added up to 131 okay so we take 1.31 and we multiply that times a hundred that equals 131 and then we did four contracts so you say times four and that equals 524 in this case negative 524 so on the four contract trades we lost 524 dollars so 831 minus 524 that's where we get the total profit of 307 so again if you're new to this this is all going to sound like a foreign language but I promise as we're going through this and doing one trade at a time and if we go back to the platform and look we did one trade here on 11 21 and we did one on 12 4 and we did a couple weeks later on 12 20 so this is just a progressive you know adjustments and roles and and additions and and putting on trades and taking trades off and when you when you get to the end you know you all you have to do is add up all your credits and debits figure out where you are from a profitability standpoint and that's going to give you your total profit and again I hope you realize the power of this strategy that we took a big loser that went completely against us from the very beginning and by staying mechanical continuing to collect more credits extend duration by rolling and giving ourselves more time to be right we ended up turning a major losing trade into a profitable trade and if you can take your losers and then turn those into profits and of course you know these are such high probability that trades that a lot of them you're just going to put on and take off as a winner but when when one goes way against you understanding how to mechanically roll and adjust and and do the strategies that we teach step-by-step in our course it is going to make a massive difference in the profitability and consistency in your trading so I hope this was helpful if you'd like to learn more about how we've taught over 10,000 members how to trade options for consistent income just go to our site navigation trading calm click on the big orange button and we'll give you immediate access to our flagship course trading options for income we'll also give you the navigation trading implied volatility indicator that you see on our charts along with the watch list that we use to trade the most profitable symbols day in and day out all this is yours no cost just go to our site navigation trading calm and we look forward to seeing you on the inside