New Trade Entry : SPX Weekly Credit Spread for July 3 cycle. Below is the position entered earlier today:
SPX Position Entered Friday, July 12, 6 days prior to expiration. The Option Code for this cycle is SPXW130720. Because this is the regular monthly cycle, the last day to trade this is Thursday, July 18
The 20 day Moving Average was at 1624.26 at the time of entry, with SPX at 1675.81 Because the price of SPX was above the Moving Average, a Put Credit Spread was entered.
SPX Jul 3 Credit Spread shortly after entry
Time of entry: 10:50 am Eastern. SPX price: 1,675.81 at entry; VIX at 13.94
SOLD July 1645 Put. Delta -.15 at time of entry
BOUGHT July 1635 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.
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, but I have found that sufficient credit is often available for an entry as late as Friday.
With regards to the new Iron Condor trade on SPX, I have not yet entered this position today. The likely strikes at a .10 delta are, as of this writing, 1705 Call and 1635 Put. The current credit is only .85, 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 SPX and RUT credit spread trades progress.
As always, stay keen on your risk management and trade carefully.