 What's up navigation traders welcome to you this weekend's update today's Friday December 20th. I hope everybody had a great week Dealing with the uphill grind in the markets before we jump into the alerts. Let's talk about who got caught being hot this week This week goes to one of our members Tim Newton Congrats Tim. You got caught being hot He he shared an experience that I think is really helpful for a lot of traders and that was as it relates to him getting Assigned on some SPY short calls due to a dividend and I think this is just a great lesson Because what Tim did was as he self-admittedly said he kind of he kind of freaked out a little bit got a little bit Nervous had a little bit of confusion about what happens when you get assigned because as you can imagine if you've ever been assigned And all of a sudden you you know you get assigned in in your buying power reduction Expands your margin requirement expands because now you own that short stock and The reality is all you have to do is close the position and it's not that big of a deal But when you open your brokerage account and you see this issue I know it can when you're a newer trader and you're trying to figure everything out it can be Very very scary right so but what Tim did is he reviewed the option assignment mini course that we have he called his broker Just mechanically closed the trade walked through the process of of taking care of the situation And he's learned a lot from the situation and he's going to be a much better trader because of it because he now knows and understands what that's all about and I The reason I want to make such a big deal about this is because I had a situation today With a member on the exact opposite. They emailed me and they had the same situation happen. They got assigned spy They had a short call that got assigned in spy and they were freaking out. They canceled their membership. They You know, they said, you know, this is just they kind of wanted to blame us, you know, because I said, yeah You know, you can trade SPY instead of SPX. Of course, you can't get assigned shares in SPX But this person took the attitude of oh my gosh, it's the end of the world. I got assigned stock This just isn't for me. I'm out of here kind of thing and and they're and they're never going to be able to See the success as a trader and so I bring this up I mean it kills me when that happens because I and I tried to explain this in the email that hey There are a lot of nuances. I mean we have the option assignment mini course We talk about it in the iron duck strategy of the difference between trading SPY and SP what SPX? So we try to provide as much detail as information as possible but when it actually happens in real life and real trading and and they don't want to take the time to understand it and They bail on trading just because they got assigned on a on a short call I mean man, I feel I feel really bad But I think it's it's really important to understand the mindset between this person and what Tim? Didn't Tim Newton did and the fact that they posted it in the community to help other traders That is what this is all about my friends. So congrats Tim appreciate your contribution Appreciate you sharing your experience and helping other traders Good stuff man And it's just gonna make you that that type of mindset is what's gonna set you apart and make you a successful trader As opposed to somebody who runs into a little issue and decides to bail on trading all together So congrats kudos to you man. Good stuff All right, let's jump into the alerts starting with the Monday alerts on the on the 16th First one was a closing adjusting trade in ZB So we closed out one set of our short strangles in ZB booked over 30% of max profit only had the trade on for four days So got a quick contraction and implied volatility gave us a chance to book that Next trade was a rolling adjusting trade in DIA. So we rolled one set of our short call verticals I was down to four days to expiration. So we rolled out to Jan with 32 days Adjusted our strikes to keep that Keep that dream alive keep rolling that for that extending duration keeping short Delta in our portfolio and And in continuing to move on I'll go to DIA on the platform. We had another role here Closing trade in Amazon. So we closed out our iron duck in Amazon booked a beak profit on the trade Price ran higher very little chance of getting back to max profit. So we just went ahead and close that out to redeploy that capital Next one rolling adjusting trade at IWM. So we're you know, we're in expiration week We had a handful of trades still in the December cycle. So had quite a few rolls this week IWM another one is a long put vertical rolled it from Dease out to Feb went ahead and just skipped January Added a little bit more duration Adjusted those strikes to keep that short Delta exposure Speaking of short Delta, we're right at a little over three to one on our short Delta versus our Theta So not in bad shape, of course that short Delta is hurting on a week like this when the market just rips higher but it is critical to have in place Next trade closing trade in Ford slash six B. So we booked over 60% of max profit on this I talked about this earlier in the week on on our daily update videos and how You know, the the Brexit vote was gonna happen implied volatility was gonna get crushed That's exactly what happened now price was hanging out in the upper end of our range and we got down to 17 days to expiration So we really want to try to either roll or close these once we get under around 21 days to expiration Give it a couple extra days and the price dropped this morning of the 17th And so we came right almost into the center of our of our short strangle Booked a great profit on that trade and so we're totally out of six B as the implied volatility has contracted significantly in fact, let's go to FXB Which is the corresponding ETF To give you an idea. So yeah, I mean, here's the crush that happened right after that vote was over It did pop up a little bit I was hoping it was gonna keep climbing and we were gonna be able to kind of re-enter But it turned around with the rest of everything and implied volatility just started contracting again So we're out of the British pound at this point until implied volatility gets a little bit more attractive Next trade rolling adjusting trade in the QQQ so another one of these we rolled from Dease to Jan And adjusted our strikes accordingly And I'm gonna go to the platform to review all these I just want to get through some of these rolls and we'll then we'll go back and talk about them Next one rolling adjusting trade in SPY rolled from Dease out to Feb again Some of these we rolled to Jan some we rolled to Feb all we're doing is we're spreading out We're kind of diversifying our days to expiration And so if you're wondering, you know, why did you do some to Feb? Why did you do some to Jan? It's really just a matter of kind of diversifying those spreading those out between different expiration cycles Next one here on the 17th opened a new iron duck in Google and I did get a question in the community Like, you know, what's the difference between Google L and goog and and really it's just two different share classes of stock the owners of Google Larry and whatever the other guy's name is I can't can't remember off the top of my head, which by the way they Actually exited as the as the CEO. So they're they're on the board now, but they're not even they're not even the CEO but Regardless back to the back to the difference. They just created two different share classes of the stock And so both of them are almost identical The liquidity we typically find is slightly better in Google So we usually try to trade that but you know like in my personal account For example, I've got an iron duck in Google and I've got some directional verticals in goog You know, so I just I use both of them and the liquidity is not going to be an issue in either one But I just tend to gravitate to Google L first and then if I want additional trades Just kind of keep the tracking separate. Sometimes I'll do that in the in the other one So either one is completely fine to trade But that that's kind of the story there Let's let's take a look at Google So if we go to the analyze tab, so here's what that looks like Not much movement since we put that on you can see it's run up in the beak a little bit So just holding on to that Into the expiration which in this case is the January 3rd expiration cycle 17 days to expiration from the time that we put it on Next rolling adjusting trade in DIA So we rolled our remaining short call vertical and we did this one to Feb So we did one to Jan one to Feb and just keeping that short Delta exposure And then here's one in QQQ that we did from Dease to Feb as well and Then did it opening trade in FDX So we had on excuse me FedEx announced earnings After they announced the stock dropped significantly about 10% and so implied volatility stayed Elevated and so we went ahead and added a nine-day duck After the earnings announcement and so let's take a look at where we're at on that one If we take a look here, let me check the correct boxes and you can see this where we're at So prices up here One question that I that has come up a couple times is I mean look at the P&L line It's above the expiration expiration line So should we take this off and book that money for us the answer is no I mean you can do what you want, but for us we're really in this game to you know Potentially get a max profit and so with a week left on this if we put our price slice to the edge of the beak and Make sure we change our calendar to the expiration date. You can see we still got a 35% chance of Getting into that duckhead area. So We are going to leave it So that's that's the way we manage those Opening adjusting trade in ZB. So We closed one out earlier this week and implied volatility was still decent IV percentile just over that 50 mark at 52 And so we went ahead and sold another strangle did this out in in the March cycle with 65 days to expiration again Just kind of spreading that out. We typically don't sell premium over 60 days Because the theta decay is slower that further that far out But our other piece is in the feb cycle and so we went ahead and just diversified that by adding this one in March So if we take a look at ZB Here's the two pieces. Here's the 161 straddle that we've got on Widen this out so you can see a little bit better prices hanging out right here at the lower end of this range So if we look at just the untested side just the call side You can see we've got a little bit of premium left in there So we haven't made another adjustment yet But if price continues lower next week We will roll down these calls to about the 30 delta and continue to manage that and that cycle has what's it got 30? 35 days to expiration still and so we've got that one In that cycle and then the one we just added is out here in 60 with 63 days as of today And so that hasn't moved much pretty pretty well centered right there next alert was Opening trade in rut did added another double calendar a weekly double calendar front week eight days to expiration back week 15 days to expiration. We went ahead and skewed this one a bit to give us more room to the downside Just I mean no other I got some questions on this really no other reason Except that I mean this mark has just been on a tremendous run and remember with calendar spreads when implied volatility expands That expands our break even it expands our max profit and so and just to add a little bit of short delta We just went ahead and skewed this to give it a little bit more room to the downside Now what happened today? Well stocks continued higher of course because that's what they do now They're not allowed to go down But here's here's where we're at so price is Where's the price of rut? 1671 So it's hiding behind this this red hash mark so it's right there and you can see You know with the price moving up now. We're already at the kind of the break-even area and now that doesn't matter We don't do anything at that break-even, you know, we're gonna wait till we're down About 350 bucks on this trades would be way out here potentially before we would do anything But you know, hopefully we get just a little bit of reversal That's all we need is a little tiny downturn in in stocks a little tiny downturn in rut And we'll be back in here and what'll happen is our the implied volatility will really create an expansion in this Or our max profit could jump up to 500 or 600 whereas right now, you know in the in the middle of this It's about 337. So that's what I'm that's what we're hoping for Just again instead of taking a pure directional play. We just skewed this a little bit So when we put it on price was hanging out about right here And so just giving us a little bit more room to the downside and now of course We've got quite a bit room quite a bit more room to the downside. So we'll see what happens in rut All right next moving on closing trade. So we had another weekly double calendar in rut and You know, this one this one ran out hit our hit our hit our loss hit our exit points We went and close that one out for a loss And so same day right before that is when we added the other one Next trade closing trade in SPX. So we closed out one of our iron ducks in SPX Now this one had the expiration of December 30th So we were gonna be in this for another, you know, 10 days or so but price ran up Just went ahead and booked that beak profit There's very little chance of getting back to the max profit area So we just went ahead and booked that to redeploy it free up our capital and And get out of that one Next trade and this is today in Tesla. We we added a new iron duck in Tesla I've been watching this. I mean Tesla's been on fire. We talked about that in a video update earlier this week and And and I was really looking for a little bit of a pullback But we've got so much cash in our account right now just looking to add some trades So we would did went ahead and then even with the price going up look at the implied volatility continues to expand So we went ahead and put on an iron duck in Tesla And so that's what we're looking at here did this with two contracts We've got a big profit of 132 max profit of 632 and That one expires on the Jan 3 cycle. So as of today, we've got 14 days until expiration Next trade opening trade in SPX. So again, just trying to add some position So we added an iron duck in SPX went out to 21 days to expiration on this one And so if we take a look at SPX here, there we go catch up That is this one here So we just put that on so not much movement since we put it on so we've got a beak profit of 115 max profit of 615 on that one now We are still holding this one that expires today So at the time of this recording the market is not closed So we're just going to let this one expire and book that hundred and ten dollar beak profit So we'll send out an alert by the time you watch this you will have received an alert That that option those options have expired. So that's where we're at at SPX Hope to maybe you know if we get some downside potentially add another SPX duck next week So that's the plan there Rolling adjusting trade. So this is a this is one that a little interested So if you had this position on what we did here is is our long put vertical it with the stock with stocks moving higher It was at a kind of a loss max point And so instead of even technically rolling it we just let that one expire and then we added this one So it's the same thing this one closed. We added this one same as rolling And this just extends duration keeps that short delta in our portfolio We've been using this ES long put vertical for for quite a while. It's kind of that downside hedge piece and Then lastly closing trade in Shopify. So hit a nice reverse iron duck right in the duck head for near max profit closed it out for 15 cents so pretty much expired worthless gave it giving us a profit of over a thousand dollars on that trade So great great Reverse duck in Shopify and we'll probably look to add another one of those early next week Some of the other positions here. I mentioned ES G well, I didn't show it on the platform though So this is this is our long put vertical here in ES. Just put this on to keep some of that short delta exposure GC I want to talk about this one because we're at a point where we could you know We're over 40% of max profit on this GC What I'm looking to do and I talked about this I think it was in yesterday's video is I'm just gonna give it over the weekend try to squeeze out a little bit more juice on this But then the other thing is if we look at GLD Just the gold ETF Well implied volatility is really contracted today So if we get a little bit of a pop higher what I was saying in yesterday's videos I'd be percentile is over 30, which is not great We typically don't look to sell a lot of premium at that point But it's kind of one of the highest on the board, right? You've got bonds. You've got Nat gas and then there's not much else besides earnings plays and so GLD So we're looking at potentially adding another iron condor in gold out in the next cycle And then we'll then we'll also close this one. So look for that early next week Natty gas up a couple percent in our favor today so you can see prices hanging out right here again I would like I've been talking about this. I would like to add to this and we'll probably do that next week as well. We've got We've got 39 days in this cycle Part of part of the weight is I'd like to add it in the next cycle just to diversify Our days to expiration. So the next one's at 67 So a little bit more than we like to but but next week We'll probably add to this and we'll do it out in that March cycle with what now has 67 days to expiration Bonds I mentioned wheat we've got this iron condor in wheat. So price spiked higher earlier this week big big move higher here and then has just kind of Come down off of that off of that extension So prices hanging out right here in our iron condor so nothing to do quite there quite yet there Apple we've got this long put vertical that we're holding for a short Delta just outside the range need a little bit of downside to benefit that Same thing with DE we've got a short call vertical in John Deere and Then I already mentioned the the rolls we did in DIA. We've got one in Jan Which is right there price right inside the range and one in Feb Where price is right inside the range you'll notice these are the same strikes We have the same strikes in Jan and the same strikes in Feb the 284 and the 289 just different expiration cycles FDX I mentioned that one Google I mentioned IWM we've got this Long put vertical again for short Delta prices hanging out right here inside the range Same thing on QQQ. We've got one in Jan Where price is right here at the breakeven point and then we've got one in Feb where price is 211 Yeah, price is right here right on the right on the price slice. I mentioned rut SMH So SMH is not playing friendly with us. It's outside of our range here You know I've talked about I would like to add to this But implied volatility is just too low. So we're gonna continue to manage if we take off the if we look at just the puts Just the untested side See we got a little bit of profit left that we could capture and on that side before we would roll and So we you know price stays here or continues higher into next week. We will be rolling up those puts This cycle has 28 days. So By next week we're down to 25 24 something like that We will just roll up the puts and roll that out to the next expiration cycle in Feb. So that's the plan there SPX SPY So we've got a We've got this short call vertical in SPY now you might be wondering well, how come you didn't get assigned? Well, the reason is is because The the folks who got assigned had iron ducks in SPY so they had in the money calls. These calls are out of the money So there's no there's no dividend risk on that situation So you just got to understand the positioning of those and just make sure you review the options Many many course option assignment mini course There's a whole section on dividend risk and how and how to figure that out You're basically just looking at the corresponding puts to where your calls are depending on the value of the dividend and the Corresponding put value. That's what it's going to determine if you are at dividend risk. It's it's very simple It's kind of confusing at first, but I promise you if you just Look at it write it down. Watch the video a few times. It will become not not a big deal Mention Tesla XLK Again, we've got a long put vertical here prices moved out of range. So we will be just holding this for now. So Those are all the positions. Those are all the alerts Let's see. Is there anything else I wanted to mentioned? I mentioned assignment risk You know keep in mind too the other thing I wanted to mention on assignment risk When if you get assigned Your risk does not change Okay, so if you have a an iron duck on and one of these You know the short call gets assigned for example your overall risk doesn't change It doesn't it doesn't look the same on your risk profile graph So you can't you can't look at it that way But your overall risk does not change and so that's that's the other piece that I that I think you know Tim expressed and understands now and I want to make sure everybody understands that that your risk doesn't train change You're buying power changes, which is kind of what freaks people out when they first get assigned But your overall risk doesn't change now another good point that was made in the community that I also want to reiterate We've talked about before but that is if you're in an iron duck that expires And you get assigned well if the trade is expiring and you get assigned You no longer have those other legs. So your risk does change so you what you don't want to do is you don't want to get assigned and The rest of the legs expire because then you're just holding that naked short stock and You know if it makes a move against you over the weekend then then you do have that additional risk Again, is it that big of a deal? Well, of course, it depends on what kind of movement you get Sometimes it works in your favor. Sometimes it works against you but the reality is that you just you typically don't want to get assigned If the other options expire, but if you get assigned like the dividend the SPY situation your overall risk does not change You just need to close out the remaining pieces and and take what's take what's left So that is all oh one other thing. Sorry one of the thing I wanted to mention here. I'm looking at my notes That is when you're when you're looking at setting up iron ducks in the class We talk about the criteria that we look for is we want to have over 85 percent probability of profit That's where we like to that's where we like to set those up. You may have noticed for example. Let me go to Let me go let me go to Amazon. I think that's the one I was looking at today But there's a variety of them that they're kind of in the same situation So if we look at Amazon, this was one I was looking at from the GN4 cycle Look at the look at the situation here. So the iron duck sets up decent, right? We've got a max profit on this of 539 You know that's pretty close to the break-even break even is a little higher Actually, let me just let me just start this over because I think this is important to understand So let's just try to set up an iron duck on Amazon. Let's say 14 days to expiration Let's go through and look at about the 6566 Delta calls we're gonna sell iron condor Go to the let's call it the 1750 on the put side and The 10 Delta, which is the 1735. Okay? so What I want to show you if we take it over to the analyze tab is a lot of the criteria checks out right we've got Got a duck beak no risk to the upside max profit 337 In this case, let's move our puts up one to see if we can Make sure make that criteria. So yeah now max profit 316 And we've got a our break-even is is less than 300. So that's less than the max profit nice beak profit Okay, so everything looks good except Look at the probability of profit. It's only 76% right We like to be over 85 typically the edge of the duck head or the break-even is Is closer to this area, you know outside this gray shaded area. So much much better high probability trade With implied volatility being as low as it is with the options pricing Contracting to the to the to where it's at. It's it's difficult to find Probability of profits over 85% okay, so a couple things. What can you do about that? Well, you could set him up with a probability profit under 85 right and that's what we're gonna have to start looking to do I mean even though even the SPF one that I put on today. I think it had like 84% The Tesla one I think may have had under 85. Let me just make sure here Tesla Mark our deal there yeah 81 so 81% so That's still a that's still a high probability of success But it's not you know, so it's breaking our rule a little bit of that 85% But we want to stay active we want to stay in the game We want to continue to put these on because there's still high probability plays But I wanted to point that out that when implied volatility is has contracted as much as it has across the board That's kind of the situation that you're gonna find yourself in now as earnings start to come closer again Implied volatility is got gonna start expanding in these stocks and then we'll start getting these pops above 85% But I just wanted to point that out that sometimes you got to give up a little bit of that probability When implied volatility is as low as it is so hopefully that's helpful Just wanted to make sure you're aware of that if you guys have any questions let us know have a great weekend We'll talk to you next week