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  • Adjusting a Double Calendar

    September 14, 2009 by  
    Filed under Double Calendars, Iron Condors, Options

    Q: I’ve bought your online course & it’s really eye-opening to someone like myself who thought he has already known a lot about options.

    I’ve gone through all your videos regarding the portfolio selection, the setup & adjustment of the “Double Calendar” and “Sale of an Iron Condor” trades and they were clearly explained.

    However, I have this bugging question that I hope you could help me. That is, how do you adjust a “Double Calendar” or “Sale of an Iron Condor” position if the price goes against your position (ie. moved very close to your breakeven point) if it happened during the last 1 to 2 weeks before expiration and options premium have already gone down a lot.

    Would laying another double calendar over an existing one or in the case of an iron condor, shifting the whole iron condor still be practical during these final 1-2 weeks before expiration with not much value in the option premium?

    A: I mentioned on the videos that adjustments are really only a viable solution in the 1st or 2nd week you are in the position due to the fact hat option premiums are still relatively high.

    So if you put a position on 4 weeks to expiration, trying an adjustment in the last week or two would not work due to declining premium.

    One alternative is to adjust using the next month out where premiums are higher. There no rule that says your adjustment has to be made in the same month!

    A second alternative is to simply close the position out, of course, and move on to the next month. In most cases this is the best option.

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