Another week; another new trade! SPX Weekly Iron Butterfly Entry for April 2 Cycle.

SPX closed today at 1559.98

SPX 6 month chart

Trade Entry Date: Friday, April 5

Entry Guidelines:

- Wait at least 45 minutes - 1 hour after market open before entering. Exact entry time is trader's choice.

- Look at economic news for the day. If there is potentially market moving news being announced, do not enter the trade in advance of the news release. Volatility often increases leading up to a news release, which can help you get a better credit by entering soon after the news. Tomorrow's monthly Employment Situation report comes out an hour before the open; this event can sometimes move the market significantly.

- If the price of SPX moves +/- a one-day, one standard deviation, do not enter the trade until the movement is less than a one-day, one standard deviation. As of today, this is approximately 11 points according to the calculation on my broker's trading platform.



Trade entry details are outlined below with 2 price ranges for entry as of the close today:



1) If the price of SPX is between 1552.50 - 1557.49 enter the following trade with the Iron Butterfly centered at 1555:


Order Entry: SELL (1) IRON CONDOR.

SELL 1 contract April 2 1555 CALL

BUY 1 contract April 2 1585 CALL

SELL 1 contract April 2 1555 PUT

BUY 1 contract April 2 1525 PUT


CREDIT: At the close today, credit is $18.65. This most likely will not be the credit at the open tomorrow, however, it can be used as a guideline for entry. Enter at this credit, or higher if available. Entry at a lower credit is acceptable. However, if the credit is lower than $14.00 do not enter the trade.



Position Adjustment Trigger Points (if SPX moves +/- 10 points from center strike). Note: Try to wait 45 minutes - 1 hour after market opens before making any adjustments. Watch key levels of support or resistance before adjusting. If SPX is at, or hovering around, support and resistance levels, it may be prudent to wait a bit longer to adjust. Many times the first hour's price movement is not reliable. This is something that you will get a better sense for as you learn this trade. Remember, trading is "an art and not a science."


- Upside adjustment if SPX reaches 1565.

Roll Call spreads 20 points:

Order entry for adjustment: BUY (1) CONDOR using all CALLS.

BUY 1 contract April 2 1555 CALL

SELL 1 contract April 2 1585 CALL

SELL 1 contract April 2 1575 CALL

BUY 1 contract April 2 1605 CALL

After adjusting, if SPX continues to move in the same direction 10 points, roll the threatened side up another 10 to 20 points, depending on credit remaining in the trade.


- Downside adjustment if SPX reaches 1545.

Roll Put spreads 20 points:

Order entry for adjustment: BUY (1) CONDOR using all PUTS.

BUY 1 contract April 2 1555 PUT

SELL 1 contract April 2 1525 PUT

SELL 1 contract April 2 1535 PUT

BUY 1 contract April 2 1505 PUT

After adjusting, if SPX continues to move in the same direction 10 points, roll the threatened side down another 10 to 20 points, depending on credit remaining in the trade.


1) If the price of SPX is between 1557.50 - 1562.49 enter the following trade with the Iron Butterfly centered at 1560:


Order Entry: SELL (1) IRON CONDOR.

SELL 1 contract April 2 1560 CALL

BUY 1 contract April 2 1590 CALL

SELL 1 contract April 2 1560 PUT

BUY 1 contract April 2 1530 PUT

CREDIT: At the close today, credit is $17.40. This most likely will not be the credit at the open tomorrow, however, it can be used as a guideline for entry. Enter at this credit, or higher if available. Entry at a lower credit is acceptable. However, if the credit is lower than $14.00 do not enter the trade.



Position Adjustment Trigger Points (if SPX moves +/- 10 points from center strike). Note: Try to wait 45 minutes - 1 hour after market opens before making any adjustments. Watch key levels of support or resistance before adjusting. If SPX is at, or hovering around, support and resistance levels, it may be prudent to wait a bit longer to adjust. Many times the first hour's price movement is not reliable. This is something that you will get a better sense for as you learn this trade. Remember, trading is "an art and not a science."


- Upside adjustment if SPX reaches 1570.

Roll Call spreads 20 points:

Order entry for adjustment: BUY (1) CONDOR using all CALLS.

BUY 1 contract April 2 1560 CALL

SELL 1 contract April 2 1590 CALL

SELL 1 contract April 2 1580 CALL

BUY 1 contract April 2 1610 CALL

After adjusting, if SPX continues to move in the same direction 10 points, roll the threatened side up another 10 to 20 points, depending on credit remaining in the trade.


- Downside adjustment if SPX reaches 1550.

Roll Put spreads 20 points:

Order entry for adjustment: BUY (1) CONDOR using all PUTS.

BUY 1 contract April 2 1560 PUT

SELL 1 contract April 2 1530 PUT

SELL 1 contract April 21540 PUT

BUY 1 contract April 2 1510 PUT

After adjusting, if SPX continues to move in the same direction 10 points, roll the threatened side down another 10 to 20 points, depending on credit remaining in the trade.


Please note: My goal in the above guidelines is to give enough detailed instructions for trade entry within the 2 prices ranges I felt would be likely for SPX tomorrow. However, if SPX is outside of these two ranges, following are alternate trade recommendations for entry .

UPSIDE MOVE: If the price of SPX is between 1562.50 - 1567.49, the trade can be entered with the center strike at 1565. If the trade is centered at 1560, all other entry and adjustment guidelines should be modified accordingly for the higher strike.

DOWNSIDE MOVE: If the price of SPX is between 1547.50 - 1552.49, the trade can be entered with the center strike at 1550. If the trade is centered at 1550, all other entry and adjustment guidelines should be modified accordingly for the lower strike.



TARGET GAIN AND MAX LOSS TRIGGER POINTS:

Target Gain: $150, which is 5% of maximum allocated margin ($3,000).

Maximum Loss: $300, which is 10% of maximum allocated margin ($3,000).

Your total "risk" in the position is the maximum allocated margin.

Trade is exited if either of these gain/loss conditions are met.


A trade update will be posted this weekend.

Trade carefully,

Dot Hazlin