After the ECB-sparked euphoria on Thursday, the bulls took a breather on the last trading day of the week. It's anyone's guess as to how the market will react to next week's FOMC meeting and subsequent announcement on Wednesday.
Below is the current open position status:
SPX Weekly Iron Condor
This January 5 weekly position was opened Friday; trade details are:
- SOLD SPX January 5 2105 Calls.
- BOUGHT SPX January 5 2115 Calls.
- SOLD SPX January 5 1995 Puts.
- BOUGHT SPX January 5 1985 Puts.
Order was filled as an "Iron Condor" for $1.30 net credit (all four legs).
SPX closed Friday at 2051.82, down 11 points from the previous day. The risk graph showing the position as of the close is below:
SPX January 5 Weekly Iron Condor
The position closed -$15 (risk graph shows incorrect after-hours status), the current debit to exit the position is $1.45. The position is flat delta and nicely centered at the moment. Target gain remains at 7% of the margin or risk ($61), max loss of 10% or ($87). Having said that, it is recommended to exit the position prior to the FOMC meeting announcement being released Wednesday at 2 pm est. This news often brings quite a lot of volatility to the market, and I feel it is too risky to remain in a short term position through the news.The SPX chart is below showing the short strikes:
SPX 6 month chart
RUT February Iron Condor:
This monthly position was opened Tuesday, January 20; trade details are:
SOLD RUT February 1170 Call.
BOUGHT RUT February 1220 Call.
SOLD RUT February 1170 Put.
BOUGHT February 1120 Put.
Net Credit (all four legs): 36.50
BOUGHT February 1270 call (to cut deltas): $.90 Debit
Adjustment #1 to Upside January 22:
BOUGHT RUT February 1170 Call.
SOLD RUT February 1220 Call.
SOLD RUT February 1190 Call.
BOUGHT RUT February 1240 Call.
Net Debit (all four legs): $7.40
RUT was hovering at the next adjustment trigger point of 1190 most of the day on Friday, but closed just below it at 1188 so the position was not adjusted for the second time. The current position is a 20 point wide Iron Condor, which short call strikes at 1190, and the short put strikes at the original strike of 1170.
RUT February Iron Condor:
The position is +$77 as of the close. Target gain remains at $250, max loss $500. It is recommended to adjust the position as suggested Friday IF it appears that RUT will close above 1190. I see short term resistance at 1190 on the six month chart, but if RUT makes a break above that level it could seek 1200.
RUT 6 month chart
For those unfamiliar with the trade, guidelines were last posted on October 22, 2014, and the article can be found at this link: Link to Articles
Next week brings a fair amount of economic news, including the FOMC meeting and announcement mid-week. A recap is below:
10:30 am Dallas Fed Manufacuring Survey
FOMC meeting begins
8:30 am Durable Goods Orders
9:00 am S & P Case Shiller HPI
10:00 am New Home Sales
10:00 am Consumer Confidence
8:30 am EIA Petroleum Status Report
2:00 pm FOMC meeting announcement
8:30 am Jobless Claims
10:00 am Pending Home Sales Index
8:30 am GDP
8:30 am Employment Cost Index
9:45 am Chicago PMI
10:00 am Consumer Sentiment
Position updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,