A blowout jobs report; good news or bad news?
The non farms payroll report released Friday revealed that the US added 271,000 new jobs in October, the biggest increase this year. The unemployment rate fell to 5%, the lowest since April 2008. This good news is setting the stage for the Fed to raise interest rates before the end of 2015.
The broad market sold off at the open yesterday; SPX dipped to a low of 2083 before rebounding to close flat for the day at 2099.20. This represented a weekly gain of almost 1%, the longest weekly winning streak since late last year.
Below is the open position status:
SPX Weekly Iron Condor for November 2 cycle
SOLD SPX November 2 2130 Call, 1.50 credit.
BOUGHT SPX November 2 2140 Call, .75 debit.
SOLD SPX November 2 2035 Put, 2.90 credit.
BOUGHT SPX November 2 2025 Put, 2.15 debit.
Order was filled as an "Iron Condor" for $1.50 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: $850.
Target Gain: 7% of margin/risk or $60.
Max loss: 10% of margin/risk or $85.
Below is the risk graph of this week's position as of the close Friday:
SPX November 2 Weekly Iron Condor:
As of the close, the position is +$35; the current debit to exit is $1.15.
Our "good to cancel" order remains in place to exit the position at target gain or max loss. The position is negative delta so should benefit from a slight pullback early next week.
Below is the SPX chart showing the short strikes:
SPX 6 month chart
A recap of next week's economic news is below:
8:30 am Import & Export Prices
US Veteran's Day Holiday, markets open
8:30 am Jobless Claims
9:05 am Fed James Bullard speaks
9:45 am Fed Jeffrey Lacker speaks
10:15 am Fed Charles Evans speaks
11:00 am EIA Petroleum Status Report
11:45 am Fed William Dudley speaks
8:30 am Producer Price Index
8:30 am Retail Sales
10:00 am Business Inventories
10:00 am Consumer Sentiment
11:45 am Fed Loretta Mester speaks
New Trade Entry:
Next week is the planned entry for the SPY Iron Condor for the November monthly cycle. Monday will be 39 days to expiration; so we will plan to enter the position sometime next depending on market conditions and available credit.
For those unfamiliar with the trade, the guidelines for all the Couch Potato Trader plays were most recently published 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,