SPX Weekly Credit Spread for March 2 and SPY "Test Kitchen" Iron Condor
1) SPX Weekly Credit Spread for March 2.
Below is the current position as of the close Friday:
SPX Weekly Credit Spread for March 2:
The position is +$22.48, or 3.5% of the margin. Target gain remains at $63.75. My OCO order remains in place to close the position for target gain ($.20), or the pre-set max loss ($1.70).
Last week I posted the year-to-date results for the weekly credit spread. A reader inquired about these same results for last year; I apologize that I have not posted the summary previously. In 2013 the SPX weekly credit spread was traded for 22 weeks; there were 15 wins and 7 losses. The results are all based on a single contract. The average gain was $28 per week including the losing weeks; which resulted on an average return of 3.1% per week based on an average margin/risk of $910 per week.
2)Monthly Iron Condor for April
I have been trading the monthly IWM Iron Condor for the last six months; the results have been mixed with 3 wins and 3 losses. With only a 50% win rate, I am back to the "test kitchen" with this strategy and would like to try another vehicle. Beginning with the April cycle, I will begin trading an Iron Condor on SPY, rather than IWM. I will test the waters with this as a paper trade, so I am not recommending it be traded live yet. Monday will be 39 days to April expiration, so I will look to open the position sometime this week.
SPY closed Friday at 188.21. The guidelines call for the short strike to be at a delta of .15 - .20. Based on the closing price, the current strikes recommended would be:
Calls: -194/+199 â€“ Current delta of the 194 call is .16
Puts: -178/+173 â€“ Current delta of the 178 put is -.16
This example is shown in the graph below:
SPY April Iron Condor Example:
The current credit for this sample position is .80, which is the minimum for this strategy. However, the illustration is just an example for planning purposes as the deltas/strikes/credit will likely change at the time of entry. Some traders may choose to be more aggressive and sell spreads with a higher delta on the short for more credit. However, being the more conservative trader that I am; I will go as wide as possible as long as I can still get the minimum credit of .80 and look for the lower end of the recommended delta-range.
The target gain on the monthly Iron Condor is 10% of actual margin/risk, and the maximum loss is 15%. As far as adjustments, this initial position will be traded as a "no touch". The position will remain open as long as SPY remains between the short strikes, until the target gain is reached. The position will be exited at either short strike or a 15% loss.
I will post entry details next week when the position is opened.
As always, trade carefully and stay keen on your risk management.