Investors will be leaning on every word Janet Yellen speaks at her speech today.
Yesterday was an ugly afternoon in the market, SPX closed down 17 points at 1867.72, without any real "news" causing the drop. Today brings the start of Janet Yellen's two-day testimony on Capitol Hill, and all ears will be on her speech.
The SPX Weekly Credit spread for May 2 cycle is hovering at breakeven; at the close yesterday the debit to exit the position was .80, which is the same credit we received. The short put strike of 1840 is currently 27 points away from the closing price.
If Janet doesn't say anything to veer off her usual dovish stance, the market could react favorably. I will stay on track with the trade plan and keep the position open until either target gain is reached ($60), or the pre-set max loss ($80).
However, I will be very vigilant on this position, as the reverse scenario could just as likely take place.
If anyone in this position feels uncomfortable keeping the position open through Yellen's testimony begins, it is recommended to exit the spread before 10:00 am this morning, the start of her speech. As I have written numerous times, there is nothing wrong with exiting a trade early, it is an individual trader's choice.
Stay keen on your risk management and trade carefully,