New Trade Entry : SPX Weekly Credit Spread for August 4 cycle Below is the credit spread position entered a short while ago:
SPX Call Credit Spread Position Entered Friday, August 16, 7 days prior to expiration. Because SPX is below the 20 day EMA (1690.19), a call credit spread was entered.
SPX August 4 Credit Spread shortly after entry
Time of entry: 12:45 pm Eastern. SPX price: 1,659.76 at entry; VIX at 14.15
SOLD August 4 1690 Call. Delta .13 at time of entry
BOUGHT August 4 1700 Call
Credit received: $.90
Maximum margin/risk is $910. Maximum risk is the width of the spread ($1,000 less credit received $90).
Target Gain: $67.50 (75% of credit received). This gain represents a 7.4% gain on actual margin.
Maximum Loss: $90
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.
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully.