Another day, another record-high close for SPX.
SPX managed to close Friday once again in uncharted territory, fueled by the news that a cease fire agreement between Russia and Ukraine was being put in place. The index closed Friday at 2007.71, up 10 points or .52% from the previous day.
This week's SPX Iron Condor for the September 2 weekly cycle was filled for a net credit of $1.35 Friday. Unfortunately, timing of this week's entry was not the best. Shortly after the position was opened, the runup began, and continued into the close. The position summary is as follows:
SOLD September 2 2020 Call.
BOUGHT September 2 2030 Call.
SOLD September 2 1955 Put.
BOUGHT September 2 1945 Put.
Below is the risk graph of the current position as of the close Friday:
SPX September 2 Weekly Iron Condor
The position is ($30) as of the close. We need a pullback, or at least for SPX to stall so theta can work, for it to benefit. We will watch the position carefully; and it will be exited if it reaches the pre-set max loss of 10% ($85). If SPX pulls back early next week, the position will remain open. The target gain remains at 7% of the margin/risk, or $60.
The chart below shows the short strikes:
SPX 6 month chart
The calendar is fairly light next week for economic news:
10:00 am JOLTS Job Openings Report
10:30 am EIA Petroleum Status Report
8:30 am Weekly Jobless Claims
2:00 pm Treasury Budget
8:30 am Import/Export Prices
8:30 am Retail Sales
9:55 am Consumer Sentiment
SPY Monthly Iron Condor for October
Monday will be 39 days prior to October expiration; so we will begin to look at entering the monthly Iron Condor on SPY sometime next week. Strikes are now available over 200, so we should be able to select appropriate strikes within the trade guidelines.
For those of you who may not have been following the monthly Iron Condor, a summary of the trade entry is as follows:
- Sell a Call with a delta in the .15 - .20 range.
- Buy a Call 5 points higher than the short call.
- Sell a Put with a delta in the -.15 - -.20 range.
- Buy a Put 5 points lower than the short put.
- Minimum credit (for both sides) should be at least .80, or it is not recommended to enter the position.
- Target gain is 10% of the actual margin/risk. This is calculated by the width of the wings (5 point in this case = $500), less the actual credit received. For a one-contract trade using the minimum credit of $.80, the margin/risk is $420. Target gain in this example is $42.
- Max loss is 15% of the margin, or $63 using this same example.
- This position will be traded as a "no touch"; it will remain open as long as SPY remains between the short strikes, until the garget gain is reached. The position will be exited at either short strike or the pre-set 15% max loss.
Last month we entered the position in XSP, the mini-index for SPX rather than SPY. I will compare the two before entering the October position, and will post the recommended trade entry sometime next week.
A full description on the XSP mini index can be found here:
Link to XSP Description
I will post trade updates as appropriate.
As always, stay keen on your risk management and trade carefully,