FullyInformed.com

3 Exit Strategies To Maximize Return In IWM ETF Small Cap Seasonality Trade – Eyes On The Russell 2000 for Dec 29 2015

Dec 29, 2015 | Investor Questions, IWM ETF – Small Cap Stocks, Trade Alerts and Ideas

On December 15 I bought 20 call options for Jan 15 expiry at the $112 call strike in IWM ETF. This trade has produced significant gains to date. The problem is knowing when to exit the trade as it is an option trade with an expiry date. That means as the expiry approaches, the call options will lose premium until eventually they will be trading almost in lockstep with the call strike itself.

Many investors have been emailing wondering what strategies could be used to try to both protect the profits they already have and still enjoy possibly more profits if IWM continues to move higher which will drive up the call premiums. If such a strategy could be found it could assist in maximizing the return for the trade by squeezing out as much profit as possible.

As all the emails received are basically focused on the same question of what exit strategies could be used, I picked one of the emails to include below to provide some answers.

The investor who wrote in is up 125% on this trade and 32% overall for the year. With such a large gain on this trade, she is worried that she will lose the gains already made but if she exits too early she could lose out on further profits. Here is her question and some strategies for her to consider.

Investor Question:

Hi Teddi;
I entered your IWM Combo Seasonality trade but got in at a better price. I closed my credit put spreads the same day you did but I have not sold anything further yet. I have more than doubled my return and I am now up 125% in this trade. This year has been my best ever. I am up 32% this year. I have never been up more than 8 or 9 percent before joining your site. I am glad to have found your service! I am worried a bit on this IWM trade. The ETF looks like it isn’t going to move a lot higher. I have 40 call options (in a credit call spread) and I know you said IWM could move a lot higher into March. How should I stay with this trade. IWM looks stuck as it keeps moving sideways. I don’t want to get out too early but I also don’t want to lose my profit. My calls expire Jan 15, like yours. Do you think IWM can move a lot higher before then? How are you managing this trade. Thanks for a great year. I am a member for life or at least until you stop writing.  Francine.

3 Exit Strategies To Maximize IWM ETF Trade Return

This Strategy article is 2100 words in length and will is 6 pages if printed. It is for FullyInformed Members.

To read the latest IWM ETF strategy article, members can login directly through this link  or Members can sign in to the full members site here. Non-members can join here or read the benefits of being a member.


 

Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.

Stay FullyInformed With Email Updates

    Your First Name (required)

    Your Email (required)

    Anti-Spam: Please Answer This Math Question

    I will send you a reply to confirm that you want to subscribe before sending any emails.

    Market Direction Internal Links

    Profiting From Understanding Market Direction (Articles Index)

    How I Use Market Timing

    How I Use Market Timing

    Understanding Short-Term Signals

    Various Market Timing Systems

    Market Direction Portfolio Trades (Members)

    Market Direction External Links

    Market Direction

    IWM ETF Russell 2000 Fund Info

    Market Direction SPY ETF 500 Fund Info

    Search

    Select to view all results...

    Generic selectors
    Exact matches only
    Search in title
    Search in content
    Post Type Selectors

    More Trade Alerts and Ideas