 Hey everyone, welcome to another video lesson from navigationtrading.com. In this video, I wanna talk about adjusting an inverted strangle. Now, remember, when we put on a strangle to enter a position, a short strangle, we are selling out of the money puts and we're selling out of the money calls. Now, if we need to make an adjustment to a point where we're either rolling up the puts or rolling down the calls, sometimes we get to a point where the calls are rolled lower than the puts or the puts are rolled up higher than the calls and so we call that being inverted because we no longer have the puts being the lower strike and the calls being the higher strikes, we actually have the calls lower than the puts, the puts higher than the calls and so that's what we call inverted. The question is, how do we continue to manage that and adjust that position as we go and the example that we're looking at is Intel, ticker INTC. So this is a position that we put on right after earnings on 426 of 2019 is when we entered this trade and part of the reason is the announced earnings had a huge drop which caused the options to stay elevated. The implied volatility was still elevated, giving us a scenario that we thought made sense to sell some premium in Intel. Obviously in hindsight, we didn't know what was gonna happen, but what did happen was the stock continued to slide to the downside. So what we had to do is we had to continue to roll those calls down and by doing that we eventually became inverted. So if we take a look at our monitor tab just to give an idea of what we've done here, so on 426 we sold the strangle and then on 529 we rolled down those calls so we rolled down from 55 down to 49 and then a couple weeks later on 523 we rolled the spread out from June to July and we rolled the calls down even further from 49 down to 45. Okay, so now we have the 45 calls and the 50 puts and so that's where we stand with the position right now. We've got the 45 calls which are lower, it's a lower strike than the 50 puts so we call that inverted. The 45, our call is down here and our put is up here. And so what's happened now is prices bounce back a little bit and we're pretty close to center and you can see we've got a max profit of 624 and we've currently got, based on where the pink line is here our profit line, we've got about 373 of that $624 that we've made back. Now the question is what do we do at this point? You know, if we typically just had a regular short strangle on we would be closing this trade once we got to 50% of max profit, could we do that here or should we do that here? That is absolutely an option of what you could do. So we are over 50% of max profit, we could just close this and move on to the next trade. Now the other thing to consider is where are we after adjustments from a profitability standpoint? So if you go to the monitor tab and you say okay, let's add up our credits we originally sold this for 202 then we added another credit of 99 cents and then we added another credit of $1.07 so we've got 201, we've got 301, 408. So we've got about $4.08 in credit total. Now if we go back to the trade and we say okay, what if we close this out? What would that look like? And so if we right click and do create closing order if we bought this back we'd be buying it back for a debit of $6.23. So we're still down a couple hundred dollars on the trade, right? And so when that's the case I typically like to continue to manage these trades until we get back to profitability. But again, it all depends on where you want your use of capital. If you think there's a better use of capital getting out of this trade and redeploying it into a different trade then you should close this one and do that. In this case we've got a significant amount of cash. We're looking for opportunities and so this is one that we would just continue to manage. And so here's the dilemma then that we think of here. We are in July at the time of this recording we have 36 days until expiration. So remember when we get closer to that 21 days to expiration that's when we really like to roll out in time to extend duration. But right now we've got 36 days. So we've got a lot of time we were to roll out we're rolling out to August with 64 days to expiration which is a little bit outside of our wheelhouse as far as duration goes of entering positions. So the question is then well what do we do? And the answer and what we are going to do with this trade is we're just gonna simply hold it. I mean we're pretty fairly centered of course a big move up or a big move down is gonna get us out of center but we're collecting that theta. You know we're collecting about $6.30 per day of theta. It just stayed right here and that's gonna continue to go up as we get closer and closer to expiration. Now what I will say is that we probably wouldn't wait all the way down until 21 days to expiration before we roll this but once our August options get under that 60 day we like to be in that kind of that 30 to 60 day timeframe once August gets down below 60 then we might consider rolling this out again. So we'd roll out from July to August. So in the next week or so we would consider doing that because we have captured over 50% of the profit in this piece and so rolling it out, booking that, locking that in, extending duration, collecting another credit for doing so makes sense. The other thing to consider is because Intel is an individual stock it does have earnings. Now when is earnings? Well it's not out here until July 25th. Today this recording, today is June 13th and so we've got about a month and a half before we even have to deal with earnings. So the plan is over the next week or so once those August options get under 60 days we will just roll it out to August and assuming that price is still kind of within between our short strikes we will just roll this as an inverted position. So we would just keep the strikes the same keep the 45 call, the 50 put roll that out from July to August collect another credit for doing so and then just continue to manage and wait for some more theta to pass. Now are we trying to get the original 50% of max profit of our original trade? Remember we sold this for 202 so it'd be getting a profit of a dollar on that trade. We may not wait that long especially if we're getting close to earnings at that point we'd have to make a decision do we wanna hold through that earnings announcement or if we're profitable even by just a little bit do we just wanna close that, book it, take it off, not take that earnings risk. So these are just some of the thoughts that we have when we're considering managing a trade like an inverted strangle. Hope that was helpful, we'll see you in the next video.