RUT Weekly Calendar Trade #4 (Part 2)

As discussed in the last post, my weekly calendar trade was still down after Day 2 (5/6/15) but farther away from the downside adjustment point.

The market was up on Day 3 and the trade was profitable by noon. At the close, the market was at 1225 and somewhat comfortably within the adjustment points.

Friday was the big day with the jobs report to be announced at 8:30 AM. The market liked the report and opened around 1235. My contingent order to close was triggered and I got out with a profit of 8.5%.

I will say that I wasn’t entirely happy with this result because I’ve been aiming to close with a profit of 10% or better. In this case, I opened the trade for $6.70 and closed for $7.30.

Here’s how it should have gone:

Bought 2 @ $6.70 = $1,340
Add $8 for commissions on eight contracts: $1,348
Add 10% profit target: $1,348 * 1.1 = $1,483
Price per calendar = $1,483 / 200 = $7.415

I should have entered a contingent order to close for $7.42 or $7.45 (if I wanted to round up to the nearest nickel) rather than $7.30. Oh well… any win is much better than a loss!

I could look to get 8% on the trade if out by Friday. That would mean accepting a slightly lower profit to avoid the weekend risk. I don’t want to be taking losses much larger than 8% when it doesn’t go my way, however. My max loss has been 15% and my two losers closed for several percentage points worse than that simply due to slippage and fast market movement. This might or might not be viable depending on how much this trade wins.

In four weeks, I have thus far won on two of them. I’m down money overall, though.

We’ll see what next week brings.