A cautious Friday, but in the end October produced the highest monthly gain since October 2011.
Friday was a relatively quiet end of the month, the afternoon saw the broad indices retreat to close near the lows of the day. However, the weekly gains continued for the fifth consecutive week. SPX closed down 10 points at 2079, but ended up +0.2% for the week. The benchmark index rose 8.3% in October, the largest monthly point gain on record.
Below is the current open position status:
SPX Weekly Iron Condor
This November 1 weekly position was opened Friday; trade details are:
SOLD SPX November 1 2125 Call, 2.15 credit.
BOUGHT SPX November 1 2135 Call, 1.20 debit.
SOLD SPX November 1 2025 Put, 3.10 credit.
BOUGHT SPX November 1 2015 Put, 2.45 debit.
Order was filled as an "Iron Condor" for $1.60 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: $840.
Target Gain: 7% of margin/risk or $58.
Max loss: 10% of margin/risk or $84.
The risk graph showing the position as of the close is below:
SPX November 1 Weekly Iron Condor
We seem to have had a break on the entry week this week - immediately after our order filled, the decay picked up and continued as SPX drifted down. I heard from one subscriber who was not able to get filled which, unfortunately, sometimes happens. At least with weekly trades it is only a short time before the next trade entry.
As of the close Friday, the position is +$50, very close to target gain. Our order remains in place to exit the position for target gain as well as max loss. The position is very flat delta so should be in decent shape going into next week barring any overseas news that may rock the market.
Below is the 6 month chart showing the short strikes:
SPX 6 month chart
Next week's economic news is sprinkled with a flurry of Fed speakers later in the week, as well as the monthly Non Farms Payroll report on Friday. A summary is below:
9:00 pm China Manufacturing PMI
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
8:30 am International Trade
10:00 am ISM Non Manufacturing Index
10:30 am EIA Petroleum Status Report
8:30 am Jobless Claims
8:30 am Productivity & Costs
8:30 am Fed Patrick Harper speaks
8:30 am Fed William Dudley speaks
9:10 am Fed Stanley Fischer speaks
10:40 am Fed Charles Evans speaks
12:45 am Fed Daniel Tarullo speaks
1:30 pm Fed Dennis Lockhart speaks
7:30 am Fed James Bullard speaks
8:30 am Employment situation report
The trade management guidelines for all the Couch Potato Trader plays were most recently published on August 20, 2015, 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,