Another week; another new trade! SPX Weekly Iron Butterfly Entry for May 1.

SPX closed today at 1585.16

SPX 6 month chart

Trade Entry Date: Friday, April 26

Entry Guidelines:

- In the event you were not following my RUT trade post, the CBOE exchange was down due to system problems for over 2 hours this morning. CBOE is the only exchange where SPX trades are executed, so caution is advised, and I recommend checking with your broker before entering the position to be sure the exchange is up and running. We not only have the risk of market movement, but are also subject to technical issues that may cause execution problems. This could potentially also be a problem if an adjustment is required unless CBOE is able to fully resolve the issues. I would also recommend checking the CBOE's web site for a status on their systems.

- Wait at least 45 minutes - 1 hour after market open before entering. Exact entry time is trader's choice. I sometimes wait until the last hour of the day before entering.

- GDP is being released at 8:30 est. tomorrow morning, so it is definitely prudent to wait until things settle down after the open as this can sometimes be a market-mover.

- 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. If it does not settle down to be less than a one standard deviation, do not enter the trade. As of today, this is approximately 11 points according to the calculation on my broker's trading platform. It is perfectly fine to sit out entering a live position, and paper trade to fine tune your skills if conditions are not right for a live trade entry.



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 1582.50 - 1587.49 enter the following trade with the Iron Butterfly centered at 1585:


Order Entry: SELL (1) IRON CONDOR.

SELL 1 contract May 1 1585 CALL

BUY 1 contract May 1 1615 CALL

SELL 1 contract May 1 1585 PUT

BUY 1 contract May 1 1555 PUT

CREDIT: At the close today, credit is $17.45 . This most likely will not be the credit at the open tommorrow, 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 $14.50 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 1595.

Roll Call spreads 20 points:

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

BUY 1 contract May 1 1585 CALL

SELL 1 contract May 1 1615 CALL

SELL 1 contract May 1 1605 CALL

BUY 1 contract May 1 1635 CALL


- Downside adjustment if SPX reaches 1575.

Roll Put spreads 20 points:

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

BUY 1 contract May 1 1585 PUT

SELL 1 contract May 1 1555 PUT

SELL 1 contract May 1 1565 PUT

BUY 1 contract May 1 1535 PUT



1) If the price of SPX is between 1587.50 - 1592.49 enter the following trade with the Iron Butterfly centered at 1590:


Order Entry: SELL (1) IRON CONDOR.

SELL 1 contract May 1 1590 CALL

BUY 1 contract May 1 1620 CALL

SELL 1 contract May 1 1590 PUT

BUY 1 contract May 1 1560 PUT

CREDIT: At the close today, credit is $16.40 This most likely will not be the credit at the open tommorrow, 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 $14.50 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 1600.

Roll Call spreads 20 points:

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

BUY 1 contract May 1 1590 CALL

SELL 1 contract May 1 1620 CALL

SELL 1 contract May 1 1610 CALL

BUY 1 contract May 1 1640 CALL


- Downside adjustment if SPX reaches 1580.

Roll Put spreads 20 points:

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

BUY 1 contract May 1 1590 PUT

SELL 1 contract May 1 1560 PUT

SELL 1 contract May 1 1570 PUT

BUY 1 contract May 1 1540 PUT

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 1592.50 - 1597.49, the trade can be entered with the center strike at 1595. If the trade is centered at 1595, all other entry and adjustment guidelines should be modified accordingly for the higher strike.

DOWNSIDE MOVE: If the price of SPX is between 1577.50 - 1582.49, the trade can be entered with the center strike at 1580. If the trade is centered at 1580, 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