After closing at record highs to end the week, what is next?
The bulls were clearly in charge yesterday, with all indices closing at new record highs. SPX closed at 2097, up 9 points or .41%.
Below is the current open position status:
SPX Weekly Iron Condor
This February weekly position was opened Friday; trade details are:
- SOLD SPX February 2120 Call.
- BOUGHT SPX February 2130 Call.
- SOLD SPX February 2045 Put.
- BOUGHT SPX February 2035 Put.
Order was filled as an "Iron Condor" for $1.65 net credit (all four legs).
SPX was at 2092 at the time the order filled, so the closing price Friday at 2097 was 5 points above the entry point. The short call delta is now .16, so a slight pullback will benefit the position. The risk graph showing the position as of the close is below:
SPX February Weekly Iron Condor
The position ended up $10; the current debit to close the position is $1.55. (The risk graph shows inaccurate after-hours pricing). Target gain remains at 7% of the margin or risk ($60), max loss of 10% or ($85). It is recommended to exit the position prior to the FOMC minutes being released on Wednesday. The SPX chart is below showing the short strikes:
SPX 6 month chart
SPY March Iron Condor
The SPY monthly Iron Condor for March was opened Monday, February 9. Position details are:
- SOLD SPY March 214 Calls.
- BOUGHT SPY March 219 Calls.
- SOLD SPY March 191 Puts.
- BOUGHT SPY March 186 Puts.
Order was filled as an "Iron Condor" for $.92 net credit (all four legs).
The risk graph as of the close Friday is below:
SPY March Iron Condor
The SPY 6 month chart showing the short strikes is below:
SPY 6 month chart
The position is currently (-$22) as of the close. The short call strike at 214 is just 5 points away, so the position would benefit from a pullback. Target gain remains at 10% of margin, max loss 15% of margin.
Margin/Risk is calculated by the width of the wings ($500), less credit received. Margin/Risk for this trade: $408.
Next week brings a fair amount of economic news; a recap is below:
Markets closed; US Holiday-Presidents' Day
8:30 am Empire State Manufacturing Survey
10:00 am Housing Market Index
8:30 am Housing Starts
8:30 am Producer Price Index
9:15 am Industrial Production
2:00 pm FOMC Minutes
8:30 am Jobless Claims
9:45 am PMI Manufacturing Index
10:00 am Philadelphia Fed Survey
11:00 am EIA Petroleum Status Report
Next week is the planned entry for the RUT Iron Butterfly for the March 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, 2014, 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,