The market pushed to close higher Friday after a choppy week, maintaining slight gains over a wild week marked by thin summertime volumes, turmoil abroad, and anxiety over the timing of the Fed's plans to raise interest rates.
SPX rallied in the afternoon yesterday to close +8.15 points at 2091, or .4%. The benchmark index managed to hold onto a tiny gain for the week, +.7%.
Below is the current open position status:
SPX Weekly Iron Condor
This August weekly position was opened Friday; trade details are:
- SOLD SPX August 2120 Call, 1.15 Credit.
- BOUGHT SPX August 2130 Call, .75 Debit.
- SOLD SPX August 2040 Put, 2.85 Credit.
- BOUGHT SPX August 2030 Put, 1.55 Debit.
Order was filled as an "Iron Condor" for $1.70 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: $830.
Target Gain: 7% of margin/risk or $58.
Max loss: 10% of margin/risk or $83.
The risk graph showing the position as of the close is below:
SPX August Weekly Iron Condor
As of the close, the debit to close the position is $1.25, so we are showing a gain of $45. Our exit order remains in place to close the position if the debit reaches $1.10, which would be target gain. As outlined in the guidelines, the position will also be exited at the pre-set max loss of 10%. The position is slightly negative delta, and should benefit from a minor pullback next week.
I do recommend exiting the position regardless before the release of the FOMC minutes next Wednesday. While there are no surprises expected, this news can sometimes create volatility in the market that may put this short term position in jeopardy with little time to recover.
Below is the 6 month chart showing the short strikes:
SPX 6 month chart
SPY Monthly Iron Condor
This September position was entered Monday, August 10. Position details are:
- SOLD SPY September 216 Call, $.54 Credit.
- BOUGHT SPY September 221 Call, .09 Debit.
- SOLD SPY September 199 Put, 1.02 Credit.
- BOUGHT SPY September 194 Put, $.56 Debit
Order was filled as an "Iron Condor" for $.91 net credit (all four legs) .
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $409.
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 September Iron Condor:
SPY closed Friday at 209.42, +.32% from the previous day. The position is currently +$11, also negative delta so should benefit from a slight pullback. Target gain remains at 10% of the margin; max loss 15%.
Below is the SPY chart showing the short strikes:
SPY 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 summarized below; the highlight of next week is the release of the FOMC minutes on Wednesday.
8:30 am Empire State Manufacturing Index
10:00 am Housing Market Index
8:30 am Housing Starts
8:30 am Consumer Price Index
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
9:45 am PMI Manufacturing Index Flash
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,