New Trade Entry : SPX Weekly Put Credit Spread for June cycle.
The Option Code for this cycle is SPX130622. The last trading day for this position is Thursday, June 22. Because it is the regular June monthly cycle, there is one less day to trade the position than the usual weekly cycles.
Below is this week's position entered this morning:
SPX Position Entered Tuesday, June 11, 9 days prior to expiration:
SPX June Put Credit Spread at entry
Time of entry: 10:30 am Eastern. SPX price 1632.18 at entry; VIX at 16.44
SOLD June 1580 Put. Delta -.15 at time of entry
BOUGHT June 1570 Put
Credit received: $.95
Maximum margin/risk is $905. Maximum risk is the width of the spread ($1,000 less credit received $95).
Target Gain: $71.25 (75% of credit received). This gain represents a 7.8% gain on actual margin.
Maximum Loss: $95
I recommend that a "good to cancel" order be entered to close the position for either target gain or max loss. This can be done using an OCO (one-cancels-other) order on most broker's platforms. Each broker is a bit different; I suggest that you contact your broker for the proper setup of the OCO. Having this in place removes the emotions that can sometimes cloud a trader's judgement, and reduces the amount of time needed to be at your computer monitoring the position.
I will post an update as the trade progresses.
For those unfamiliar with this trade, the guidelines were published on May 12, 2013. The article can be found here: Link to Articles
The original guidelines call for a Tuesday entry, however, with the VIX at this level, there is usually sufficient credit to enter any day up until Friday.
Today was the planned entry day for the SPX "test kitchen" Iron Condor. However, I felt it best to diversify trade entry for this weekly cycle by time, and will enter the position tomorrow (Wednesday) if all is within entry guidelines.
As always, stay keen on your risk management and trade carefully.