Adjustment: WMT to triple calendar

Written on September 5, 2008 by OptionsRopeaDope

Easy decision here - WMT has been fighting the rest of the market, and broke throuh 60.60 on the upside.Earlier in the day I had an order to close it for a 15% profit (it got to 13% or so), now it is at a 6% profit.

My adjustment point was probably a little higher so I had a choice to make. Stick with it, and profit heavily if WMT moved down (or gapped down on Monday), or watch it turn into a losson a further move up? Or, make an adjustment and protect the profit, with a trade off of watching the profit develop a little slower.

I chose the second option. Not going to let this turn into a loss on a coin flip. I sold half of the 57.5 put calendars, and bought the same number of 62.5 call calendars.

Here’s the new profit graph.

20080905wmt.jpg

Given how WMT is a very slow mover, this is a very high prob outcome for me, even if I have to wait a few days longer to take it off. A less mature me would have rolled the dice. And probably lost fast!

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    • Category Posted in Real Trades, Calendars, WMT

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