For over a month or so we have commented on how the SPY is still trading within the upper and lower bull channel trend lines. Today the S&P 500 index closed at a 13 month high. However volume was lacking due to the Veterans Day holiday and we need to see if we continue to reach new highs with higher trading volume.
Listed below is the status of our SPY Iron Condor trade as of Wednesday, November 11th. This position has been open for 23 days:
The entire position gained $500 this week - to $1,830 in the black
SPY closed at $110.15
30-day historical volatility and implied volatility are heading lower
The SPY price is ABOVE its current 14-day EMA (see SPY chart down below)
SPY trading ABOVE its 20-day Bollinger Band SMA and 50-day simple moving average (see SPY chart)
SPY is still well ABOVE its 200-day simple moving average (see SPY chart)
Relative Strength Indicator (RSI) has turned bullish (See Spy chart)
Moving Average Convergence/Divergence (MACD) has turned bullish (See Spy chart)
Bear Call Spread
The November 1st Couch Potato recommended closing out this entire call spread for an approx. $940 profit (see tables below).
Bull Put Spread
We are immediately closing out the entire put spread for an approx. $890 profit (see tables below)
The "Risk Analysis" section of the November 7th Couch Potato article stated "... the obvious question is whether the SPY index will break through the top of the channel and go higher, or will there be another pullback to the lower level (threatening our short put)? The best case scenario for us is a market surge to minimize the risk to our short position." The market cooperated and our "best case scenario" came to fruition, we need to take advantage of the opportunity to close out our open positions and retain profits from the November Iron Condor spreads.
As mentioned above we are closing out all of the remaining Bull Put spread option contracts. After the closing trade, we will have taken our money off the table and the November Iron Condor is no longer at risk.
We initiated the SPY Iron Condor as one order with four legs. On November 1st we closed out the Bear Call spread. At this point it is not worth the risk to maintain the Bull Put spread and as mentioned above we are now exiting this position.
The "Final Comment" section of the November 7th Couch Potato article mentioned "From a technical perspective our SPY ETF index has remained mid-term bullish since the pattern of higher lows is still in force. Last weeks pullback dropped the SPY to the 103 level. The October lows are around 102 and on the upside we are recognizing resistance at the recent highs near 110." Obviously last weeks comments are still valid EXCEPT that instead of bouncing off support, the SPY is making another attempt to plow through the resistance level. We should find out very soon whether the SPY will continue making new highs, or will there be a pullback.
Couch Potato Trader Disclaimer
All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices (though many often do) or participated in these recommendations (even though many do). The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable trader might receive utilizing these strategies. If you don't get close to these results, guess what. It isn't the fault of the strategies.