New Trade Entry: SPX Weekly Iron Butterfly for April 2 Cycle. The market swooned at the open on Friday, but SPX recovered during the last hour to meet our guidelines for a new trade entry. As posted previously, the guidelines call for a trade NOT to be entered if the price of SPX moves +/- a one day, one standard deviation (11 points), until the movement is less than the standard deviation. Below is this week's position:
SPX Position Entered Friday, April 5
SPX April 2 SPX Iron Butterfly at the close
April 2 SPX Iron Butterfly centered at 1550
Time of entry: 3:40 pm Eastern. SPX price: 1,550.93 at entry; VIX at 14.27
Call spreads: -1550/+1580
Put spreads: -1550/+1520
Credit received: $17.00
Maximum margin/risk is $3,000 (width of wings)
Buying power reduction: $1,300 ($3,000 less credit of $1,700). This leaves $1,700 (less commissions) for adjustments.
Adjustment trigger points:
- Upside if SPX reaches 1560: Call spreads will be rolled up 20 points
- Downside if SPX reaches 1540: Put spreads will be rolled down 20 points
Closing order is in to close the position for a $15.40 debit, which will be a net gain of $150 after commissions.
Trade will be exited if max loss of $300 is reached.
I will post an update as the trade progresses.
As always, stay keen on your risk management and trade carefully.