The first month of the year ended up a landslide with the bears in full control.
The combination of poor economic reports, the continuing drop in oil prices, and overall fear of the health of the global economy sent the bulls into hiding as January ended.
Below is the current open position status:
SPX Weekly Iron Condor
This February 1 weekly position was opened Friday; trade details are:
- SOLD SPX February 1 2075 Call.
- BOUGHT SPX February 1 2085 Call.
- SOLD SPX February 1 1935 Put.
- BOUGHT SPX February 1 1925 Put.
Order was filled as an "Iron Condor" for $1.60 net credit (all four legs).
SPX closed Friday at 1995, down 26 points from the previous day, or a drop of -1.3%. The risk graph showing the position as of the close is below:
SPX February 1 Weekly Iron Condor
The position closed at breakeven, the current debit to exit the position is $1.60, the same as our entry price. The short put strike at 1935 is 60 points below the closing price. Target gain remains at 7% of the margin or risk ($59), max loss of 10% or (-$84). 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
Adjustment #2 to Upside January 26:
BOUGHT RUT February 1190 Call.
SOLD RUT February 1240 Call.
SOLD RUT February 1210 Call.
BOUGHT RUT February 1260 Call.
Net Debit (all four legs): $8.25
The position is now a 40 point wide Iron Condor, with the short call strikes at 1210, and the short puts at the original strike of 1170.
RUT February Iron Condor:
The position is -($86) as of the close. We will hope for a rally next week; as the position's downside adjustment trigger is if RUT reaches 1160. If it appears that RUT will close below 1160, the trade guidelines call for the put spreads to be rolled 20 points. If this adjustment trigger is reached; it would be the third adjustment since entering the position January 20. There are still 3 weeks until February expiration; but It is a trader's choice whether to make the adjustment or exit the position and call it a difficult month, to say the least.
The RUT 6 month chart shows what I see as support at 1150, and resistance at 1190.
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 monthly Non Farms Payroll report at the end of the week. A recap is below:
8:30 am Personal Income & Outlays
9:45 am PMI Manufacturing Index
10:00 am ISM Manufacturing Index
10:00 am Construction Spending
10:00 am Factory Orders
8:15 am ADP Employment Report
10:00 am ISM Non Manufacturing Index
10:30 am EIA Petroleum Status Report
8:30 am International Trade
8:30 am Jobless Claims
8:30 am Productivity & Costs
8:30 am Monthly Employment Situation Report
Position updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,