RUT Weekly Calendar Trade #5 (Part 3)

Today I will finish analyzing my fifth weekly calendar trade.

Is there any reason not to hold this trade into expiration Thursday if necessary? My bias had been to close the trade by the close of expiration Wednesday. In theory, a big gap on the last day could land this trade heavily in the loss column. Is there a significant difference between a big gap on expiration Thursday and a big gap on expiration Wednesday, though?

I have no direct experience telling me to close the trade on expiration Wednesday. Until/if this happens, perhaps I should be willing to hold the position into the last trading day as long as I don’t violate max loss or any other rules. I am controlling total risk by keeping contract size small. Do I really have much to worry about?

Alternatively, I could choose to exit by the close of expiration Wednesday and just take whatever I can get at that time.

I certainly don’t believe I had any good reason to exit the trade when I did. My max loss was not threatened. The breakout turned me into an emotional trader.

I doubt I can understand this trade in the proper context until I’ve traded many more of them. This is the first time I had to make the third adjustment on expiration Monday. Perhaps I will find this to be an extremely rare event. If that is the case then closing for breakeven is not a big deal.

However, if I find that such a Monday adjustment happens more regularly then I believe it will pay to hold the trade longer. I closed for breakeven when I was just a few trading hours away from a 5-10% profit. When a trade goes bad, I expect the losers to hit in full force (max loss) every time. If I screw up winners by taking less than the profit target then I could be turning a perfectly viable trading plan into one that loses money.