Well, the market just isn't cooperating. It tried to rebound yesterday, but in the last 90 minutes the SPX came down 20 points - again!
So, it's time we made preparations to close our SPX bull put spread. Officially, I will close the 1425/1425 bull put spread IF the SPX trades below 1432. I can only guesstimate what the debit will be.
Based on Monday's closing prices, it should be in the neighborhood of $3.70 to buy back the short November 1425 put and sell the 1415 put.
Then, I'm looking at selling the December 1335/1325 bull put spread for about $1.65. Then, I'm looking to sell the 1550/1560 bear call spread for about $1.35. The total credit for the new Iron Condor position is about $3.00.
We spent $7,400 to close out the initial Nov. 1425/1415 bull put spread. If we want to reimburse ourself for the entire $7,400, we would have to increase the number of contracts to about 25.
You may want to adjust the strikes for the December rollout Iron Condor position. Or, you may want to widen the range. Just make sure you give this a lot of thought and have a specific plan of what you're going to do -- BEFORE the market opens. It's very difficult to make these decisions during the day, when the index is moving quickly against you.
Some traders have already exited their SPX positions. Others will want to close out their position this morning and the more aggressive traders will hold on regardless of where the market trades.
Don't wait for an email from me before you act. Consider this the official exit strategy for the position -- although the prices and strikes may vary a bit.
As I write this, at the ungodly hour of 6:15 ET, the futures are up 1190. That's encouraging, but don't use that as an excuse to not make your exit preparations. We've seen how this market can move in a matter of minutes.
Your brokerage firm (if it's any good) should allow you to put in a contingency order to close out your Nov. bull put spread -- IF the SPX trades at 1432 (if that's the level you choose).
These are the situations where the couch potato doesn't want to become a hash brown. Stay out of the frying pan.
Good luck and trade smart,