Rather than take the position through the FOMC announcement this afternoon, this week's position was closed prior to the release.
I mentioned in last night's post that I sometimes will exit a position early prior to a news event for less than target gain, or breakeven. While the "news" reports didn't expect any major policy changes as a result of this week's Fed meeting and resulting minutes' release, I was concerned that the announcement may move the market against this week's position.
After the first couple of hours, of trading, our position was not quite at breakeven, but I felt it was a wise risk management decision to close the position for a minimal loss as a new trade entry is just a couple of days away, rather than have the trade go against me this late in the cycle because of the pending release.
A summary of the closing order and this week's position is:
- Original position 15.70 Credit
- Call Roll adjustment 10.10 Debit
- Closing Order 5.90 Debit
Closing order executed at 11:25 am est; SPX at 1592.78.
- The closing order resulted in a $30 loss before commissions, a net loss of $66 after my broker's fees. This represents 2.2% of the total margin ($3,000).
Year to date results for the weekly SPX Iron Butterfly are below:
SPX weekly 2013 Results
The results year-to-date now average 3.65% gain per week, still a very respectable gain on an annual basis.
The next entry date for this trade will be Friday, May 3, for the May 2 cycle. The monthly Non Farms Payroll report is being released Friday before the open. This news is often a market-moving event, so our entry will be after things settle down, most likely later in the day. Trade recommendations for entry strikes will be posted Thursday evening.