New Trade Entry : SPY Iron Condor for April monthly cycle.
Below is the position entered in Paper Money earlier today:
SPY Iron Condor Position Entered Monday, March 10, 39 days prior to expiration.
SPY Iron Condor position shortly after entry
Time of entry: 12:15 pm Eastern. SPY price: 187.59
Call Spreads: -194/+199. Delta of short call .13 at time of entry
Put Spreads: -179/+174. Delta of short put -.18 at the time of entry
Credit received: $.82
Maximum margin/risk is $418. Maximum risk is the width of the spread ($500 less credit received $82.)
Target Gain: $41 (10% of current margin).
Maximum Loss: $62 (15% of current margin).
Adjustment Trigger: As I mentioned in my weekend update, I am trading this trade in the "test kitchen" as a paper trade. The plan is to keep the position open until target gain or max loss is reached, with no adjustments. The position will be exited at either target gain or max loss, or if SPY reaches either short strike.
Below is a 6 month of SPY; showing the all-time high of 188.96 reached on March 7.
SPY 6 month chart:
One of our readers brought up a very good point in an email to me earlier today, which I wanted to share. In this seemingly relentlessly bullish market, the call spreads are affected more negatively than the put spreads. The suggestion was made to place an "unbalanced" Iron Condor, with more put spreads than call spreads. Of course, your broker will charge margin based on the side with more spreads. For example, for a ratio of 3 puts to 1 caIl spread, the margin based on 5 points wide would be $1,500 less whatever credit was received.
This is a very viable strategy, and I will put this into the test kitchen for exploration. I will share results with you in the coming weeks, and appreciate the suggestion. I always value feedback from our readers in my continuing goal to provide as many tools as possible to help be successful traders.
I will post trade updates as appropriate.
As always, stay keen on your risk management and trade carefully.