SPX May 1 "Test Kitchen" Bearish Butterfly Update; it is recommended to make a small upside adjustment. SPX May 1 "Test Kitchen" Bearish Butterfly Update; it is recommended to make a small upside adjustment. In the last update published over the weekend for this new trade (Paper Money), I mentioned unless there was a significant pullback this week a small upside adjustment may be recommended. It doesn't look like we are going to see that pullback (today, anyway), so it is recommended to make a small adjustment today.

A summary of the current position is below:

New Test Kitchen Trade; SPX Bearish Butterfly

This new trade was entered in Paper Money Wednesday, February 24. Position details are below:

- BOUGHT 3 SPX May 1 1915 Put, 73.40 debit..

- SOLD 6 SPX May 1 1875 Put, 58.10 credit.

- BOUGHT 3 SPX May 1 1825 Put, 43.40 debit.

Order was filled as a "Butterfly" for $.60 net debit(all three legs) per butterfly.

Margin/Risk is calculated at $1,000 per unit, plus the cost of the butterfly,

Margin/Risk for this trade: $3,180.

Target Gain: $500 for the 3-unit position

Max loss: $750 for the 3-unit position

As stated in the guidelines published February 17, the target gain and max loss may be modified depending on length of time in the trade, etc. Since this is a new trade being incorporated into the plan, we will evaluate progress as time goes on. There is no urgency to make this adjustment, as there is still a lot of time before expiration. But I feel a minor "tweak" to the trade will not hurt, and will help if the rally continues. The adjustment is to roll in the upper and lower wings of the butterfly. This adjustment can be done with one order, "Sell Condor", all puts, as follows:

- SELL (2) SPX May 1 1915 Puts, 13.40 credit.

- BUY (2) SPX May 1 1895 Puts 11.10 debit.

- SELL (2) SPX May 1 1825 Puts, 5.80 credit.

- BUY (2) SPX May 1 1845 Puts, 6.90 debit

The current credit (all four legs) is 1.20, and this does not increase the margin in the trade. At this time I am recommending that 2 of the 3 contracts be rolled.

An update will be posted when the adjustment fills. Please note that because there is such low open interest on these strikes, the adjustment can sometime, although in Paper Money we may get a faster fill.

As always, trade carefully and stay keen on your risk management.

Dot Hazlin