What a bounce Tuesday; the intra-day volatility continues. The SPY May Iron Condor could use some bearish action; what will today bring?
After opening flat yesterday, all indices reached the lows of the day at around noon. SPY had a range of almost 3 points from the high to low of the day. A one-day standard deviation is about 1.5 points, so the move yesterday was almost double the daily range.
As of this writing, it appears that today's open will bring more bullish action; SPY is currently trading at 185.41, up a little over a point from yesterday's close. However, given the moves during recent trading days, anything could happen before the day is over.
Below is the 6 month chart, indicating our short call strike at 190, just a bit above the all-time high of 189.70 reached on April 4.
SPY 6 month Chart:
The May Iron Condor position is shown below:
SPY May Iron Condor
The plan remains in place to keep the position open as long as SPY stays between the short strikes. The position will be exited at target gain (10%), max loss (15%), or either short strike.
For those of you that follow or trade the SPX weekly credit spread, you have seen how the whipsaw conditions we have seen so frequently make this a very challenging environment for short term traders. With the market being closed on Friday, I am hesitant to open a new weekly position before the long weekend. Events in the Ukraine continue to unfold and violence is increasing, some new "news" could impact the market Monday morning. In my opinion, this is a time for weekly traders to practice patience; the trades will resume when I feel it is a better time to jump back in. I will keep the capital allocated for the weekly position as cash and sit on the sidelines for the April 4 cycle.
As always, trade carefully and stay keen on your risk management,