New Trade Entry. : SPX Weekly Iron Butterfly for the May 4 Cycle. Below is this week's position entered today:
SPX Position Entered Thursday, May 16
SPX May 4 SPX Iron Butterfly at the close today
May 4 SPX Iron Butterfly centered at 1655
Time of entry: 12:40 pm Eastern. SPX price: 1,656.98 at entry; VIX at 12.86
Call spreads: -1655/+1685
Put spreads: -1655/+1625
Credit received: $17.45
Maximum margin/risk is $3,000 (width of wings)
Buying power reduction: $1,255 ($3,000 less credit of $1,745). This leaves $1,745 (less commissions) for adjustments.
Adjustment trigger points:
- Upside if SPX reaches 1665: Call spreads will be rolled up 20 points
- Downside if SPX reaches 1645: Put spreads will be rolled down 20 points
Again, I want to stress to everyone in this trade to review the article posted April 6 titled Gaps? Whipsaw? which contains some very important, additional guidelines to manage this trade.
Link to Articles
Closing order is in to close the position for a $15.85 debit, which will be a net gain of $150 after commissions. It is a trader's choice whether or not to exit the position early before the weekend, at a reduced gain. I will likely exit Friday if the position is at a gain of $100 to eliminate the weekend risk.
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.