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July 16, 2013

Weekly Trade update 7/16/13


Traders,
Yesterday we entered RUT JUL4 13/JUL 13 1040 Put Calendar, average cost 4.20 per spread. After a small pull back in the markets today, this trade shows unrealized gain of 9.52%


Our profit target for this trade is 15%. Does this mean we should not take some profits on the way there and reduce risk? NO!! Anyone that wants to successfully manage risk should take profits when they're there. For example, this trade shows a closing price of 4.60 as of today's close. If we can take 1/2 position off for 4.60 debit (+.40¢) and take the other 1/2 position off for 4.80 (+.60) that's a total average gain of .50¢ (per contract) which is about 11.90% return on risk. The point is, don't let winners turn into losers, take profits along the way, and while you may not hit your profit target every single time, reducing risk will keep you in this game alot longer. 
We have orders to close a part of this trade at 4.50 and we were not filled. We will try again tomorrow and we should be completely out by Thursday.
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