Volatility continues to reign, investors pause to refresh their strategies over the 3-day weekend.
The roller coaster ride continues, we continue to see huge intra-day moves on a daily basis. Friday saw a 31 point rally on SPX off of the day's low; the index closed just off the high of the day (2020) at 2019. The picture is still very unclear, at least to me, as to who will win the battle. Rather than predict a direction, I will continue to trade according to the trade plan regardless of what the market may present.
Below is the current open position status:
SPY February Iron Condor
This position was opened on January 12; order details are:
- SOLD SPY February 213 Calls.
- BOUGHT SPY February 218 Calls.
- SOLD SPY February 189 Puts.
- BOUGHT SPY February 184 Puts.
Order was filled as an "Iron Condor" for $.85 net credit (all four legs).
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $415.
SPY closed Friday at 201.63. Below is the risk graph of the current position:
SPY February Iron Condor
The position is currently +$10, totally flat delta and nicely centered on the graph. Target gain remains at 10%; the position will be exited at target gain, either short strike or at the pre-set max loss of 15%. Below is the 6 month chart showing the short strikes:
SPY 6 month chart
SPX Weekly Iron Condor
This January 4 weekly position was opened Friday; trade details are:
- SOLD SPX January 4 2070 Calls.
- BOUGHT SPX January 4 2080 Calls.
- SOLD SPX January 4 1925 Puts.
- BOUGHT SPX January 4 1915 Puts.
Order was filled as an "Iron Condor" for $1.95 net credit (all four legs).
As I mentioned at the beginning of this article, SPX rallied over 30 points from the low of the day Friday. The risk graph showing the position as of the close is below:
SPX January 4 Weekly Iron Condor
The position closed -$20 (risk graph shows incorrect after-hours status), the current debit to exit the position is $2.15. The short call strike now has a delta of .14, but is still just over 50 points away from the price of SPX at the close. Target gain remains at 7% of the margin or risk ($56), max loss of 10% or ($80). The SPX chart is below showing the short strikes:
SPX 6 month chart
Next week brings a fair amount of economic news; a recap is below:
US Markets Closed for Martin Luther King Day
10:00 am Housing Market Index
8:30 am Housing Starts
7:45 am ECB Rate Decision
8:30 am ECB Press Conference
8:30 am Jobless Claims
9:45 am PMI Manufacturing Index
11:00 am EIA Petroleum Status Report
10:00 am Existing Home Sales
The highlight of the week's news is the ECB rate decision and subsequent press conference by Mario Draghi on Thursday. The ECB is "expected" to announce a QE program. However, Draghi has disappointed so many times in the past year, whatever is announced will likely bring some volatility to the market on Thursday.
Next week is the planned entry for the RUT Iron Condor for the February monthly cycle. Tuesday will be 31 days to expiration; so we will plan to enter the position sometime next week depending on market conditions and available credit. For those unfamiliar with the trade, guidelines were last posted on October 22, 2013, and the article can be found at this link: Link to Articles
Position updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,