New Trade Entry : SPX Weekly Credit Spread for July 2 cycle. Below is the position entered earlier today:
SPX Position Entered Friday, July 5, 8 days prior to expiration. The Option Code for this cycle is SPXW130712; it expires Friday, July 12.
The 20 day Moving Average was at 1616.80 at the time of entry, with SPX at 1617.48 Because the price of SPX was above the Moving Average, a Put Credit Spread was entered.
SPX Jul 2 Credit Spread shortly after entry
Time of entry: 10:40 am Eastern. SPX price: 1,617.48 at entry; VIX at 16.14
SOLD July 2 1575 Put. Delta -.14 at time of entry
BOUGHT July 2 1565 Put
Credit received: $1.00
Maximum margin/risk is $900. Maximum risk is the width of the spread ($1,000 less credit received $100.
Target Gain: $75 (75% of credit received). This gain represents a 8.3% gain on actual margin.
Maximum Loss: $100
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.
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 volatility at this level, there is usually sufficient credit to enter any day up until Friday.
I have not yet entered a RUT credit spread for next week; the likely short strike of 970 is a .16 delta, a bit higher than I normally like to sell. I will monitor this throughout the day and post an update if a position is entered.
With regards to the new Iron Condor trade on SPX, I have not yet entered this position today either. The likely strikes at a .10 delta are, as of this writing, 1655 Call and 1570 Put. The current credit is only .90, too low for the risk of the position. I will monitor this as well and consider entry if the strikes within our guidelines yield the minimum of $1.25 credit.
I will post an update as the trade progresses.
As always, stay keen on your risk management and trade carefully.