Taking profits. So the trade I posted a few weeks ago needed an adjustment with the market run up. At the time another butterfly adjustment was used as it was the cheapest. I will also use verticals, calendars, or diagonals. Now it is time to take profits. I typically target profits of 5-10%. Rinse and repeat.

I chose the butterfly at the time because the market makers have been manipulating the volatility between the expirations on the calendars so they don’t have to pay out on winning trades. I first noticed that as the VIX contracted and would watch the individual legs and can also see it on the algo. Anyway, by using butterfly adjustment in lower volatility they cannot mess with the IV on the legs as much. I saw this happen on the service once to the tune of 600k on expiration day. We were up over 1 million on a winning fly and they managed to crush the vol of the longer options so they only had to pay 400k by the end of the day. Lesson learned, they can’t change the IV that much in the same expiration cycle or they would have to do it to the entire option chain.

This is how I morphed it and you can see my current profits are around $1100-1300 on 10k margin. I have this exact trade in 6 different account so $1100 x 6 = $6600 in profits for about 2 weeks of “work” so not a bad payday.

The trick is not over or under adjusting. Adjust only when necessary.