New Trade Entry : RUT Weekly Credit Spread for July 2 cycle. Below is the position entered earlier today:
RUT Position Entered Thursday, July 11, 7 days prior to expiration. RUT settled down after the opening gap to be within the trade guidelines for entry. The Option Code for this cycle is RUT130720. This is the regular monthly cycle; the last day to trade this cycle is Thursday, July 18.
RUT Jul 3 Credit Spread shortly after entry
Time of entry: 10:45 am Eastern. RUT price: 1,029.16 at entry; RVX at 18.33
SOLD July 3 1000 Put. Delta -.13 at time of entry
BOUGHT July 3 990 Put
Credit received: $ .85
Maximum margin/risk is $915. Maximum risk is the width of the spread ($1,000 less credit received $85.
Target Gain: $63.75 (75% of credit received). This gain represents a 7% gain on actual margin.
Maximum Loss: $85
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 an SPX trade today; as of this writing SPX is up over 17 points, over a one-day standard deviation and outside the guidelines for a new trade entry. I will monitor this throughout the day and post an update if a position is entered.
I will post an update as the trade progresses.
As always, stay keen on your risk management and trade carefully.