Last week certainly had some volatility; causing us to recommend sitting on the sidelines for a new weekly trade entry for the October 2 cycle. Without any open positions on, this weekend update will summarize the trade entry plans for the next couple of weeks.
Next week's economic calendar is quiet until Wednesday, then the activity picks up with FOMC Minutes as well as a flurry of Fed speakers both Thursday and Friday. A summary of the week's economic news is below:
10:30 am EIA Petroleum Status Report
2:00 pm FOMC Minutes
8:30 am Jobless Claims
9:45 am James Bullard Speaks
11:00 am ECB President Mario Draghi Speaks
1:10 pm Daniel Tarullo Speaks
1:15 pm Jeffrey Lacker Speaks
3:40 pm John Williams Speaks
8:30 am Import and Export Prices
9:00 am Charles Plosser Speaks
1:00 pm Esther George Speaks
1:30 pm Richard Fisher Speaks
Tentative Trade Entry Plans are below:
1) SPX Weekly Iron Condor
Depending on how the market is reacting to the various Fed speakers, we are planning to enter the SPX Weekly Iron Condor for the October 3 cycle either Thursday or Friday.
For those unfamiliar with the strategy, the trade management guidelines were updated on August 7, and can be found here:
Link to Articles
2) SPY Monthly Iron Condor
The approximate entry date for the November Iron Condor will be 39 days prior to expiration. I will look at position entry sometime the week of October 13.
For those of you who may not have been following the monthly Iron Condor on SPY, a summary of the trade entry is as follows:
- Sell a short strike with a delta in the .15 - .20 range.
- Buy a long strike 5 points away from the short strike.
- 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.
3) RUT Monthly Iron Condor
The tentative entry date for this November position will be Tuesday, October 21, or Wednesday, October 22. Exact entry will depend on market conditions, volatility, and economic news.
Updates to the entry plan will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,