A choppy Friday brought most indices to another record-high close, with solid gains for the week.
Investors still can't seem to pick a market direction, we know that will change but the million-dollar question is "when". In the meantime, we continue to trade our plan and manage positions as per the guidelines.
Below is the current open position status:
SPX Weekly Iron Condor
This May 4 weekly position was opened Friday; trade details are:
- SOLD SPX May 4 2150 Call, $1.00 Credit.
- BOUGHT SPX May 4 2160 Call, $.40 Debit.
- SOLD SPX May 4 2075 Put, $2.80 Credit.
- BOUGHT SPX May 4 2065, $2.05 Debit.
Order was filled as an "Iron Condor" for $1.35 net credit (all four legs).
Margin/Risk is calculated by the width of the wings ($1,000), less credit received.
Margin/Risk for this week's trade: $865.
Target Gain: 7% of margin/risk or $60.
Max loss: 10% of margin/risk or $86.
The risk graph showing the position as of the close is below:
SPX May 4 Weekly Iron Condor
SPX closed Friday at 2122.73, +1.63. This was another record-high close, with a gain of 0.3% for the week. SPX is now just shy of 3 points from the record high of 2125.92 reached on April 27.
As of the close, the position is currently +$20. Our exit order remains in place to close the position if the debit reaches $.75, which would be target gain. The position will be closed at target gain, or if the pre-set max loss of 10% is reached. This week's economic news (summarized below) brings the FOMC minutes on Wednesday, and it is recommended to exit the position regardless prior to that news. While there should be no surprises in the minutes, they can sometimes create volatility that may negatively affect a short term position such as the weekly Iron Condor.
Below is the 6 month chart showing the short strikes:
SPX 6 month chart
SPY Monthly Iron Condor
This June position was entered Monday, May 11. Position details are:
- SOLD SPY June Calls, .58 credit.
- BOUGHT SPY June 223 Calls, .09 debit.
- SOLD SPY June 200 Puts, 1.01 credit.
- BOUGHT SPY June 195 Puts, .60 debit
Order was filled as an "Iron Condor" for $.90 net credit (all four legs).
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $410.
Target Gain: 10% of margin/risk.
Max loss: 15% of margin/risk.
Below is the risk graph of the position as shown on my broker's platform:
SPY June Iron Condor:
SPY closed Friday at 212.44, up just slightly (.23) from the previous day. The position is currently +$23, negative delta so should benefit from a slight pullback.
Below is the SPY chart showing the short strikes:
SPX 6 month chart
The guidelines call for the position to remain open until target gain is reached, as long as SPY stays between the short strikes. They also call for exiting at the pre-set max loss, or if SPY reaches either short strike.
Next week's economic news is highlighted by the FOMC minutes on Wednesday. A recap is below:
8:30 am Housing Starts
10:30 am EIA Petroleum Status Report
2:00 pm FOMC Minutes
8:30 am Jobless Claims
10:00 am Philadelphia Fed Business Outlook Survey
10:00 am Existing Home Sales
8:30 am Consumer Price Index
9:45 am PMI Manufacturing Index Flash
Next week is the planned entry for the RUT Iron Condor for the June monthly cycle. Monday will be 32 days prior to expiration, so we will enter the position sometime next week depending on market conditions and available credit.
For those unfamiliar with the strategy, the trade management guidelines were updated on October 22, 2014, and can be found here:
Link to Articles
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,