VERY CAUTIOUS Trade Entry Suggestion for January 25
We have not traded the SPX weekly Iron Condor yet this year due to all the market volatility. Having said that, I have set up a potential trade entry for this week's expiration. I am NOT recommending this be traded with live capital; but suggesting those who are anxious to re-enter the weekly trade put on this position in Paper Money to test the waters. With the VIX still above 20, there is fairly decent credit for a Monday entry. There is an added element to this short-term trade; the FOMC meeting starts tomorrow and Wednesday afternoon is the conclusion/announcement. Even though this will be a Paper Trade, it is recommended that the position be closed regardless of the status before the announcement at 2 pm EST.
Option Code: SPX160129
Expiration: Friday, January 29
Recommended Trade Entry:
- SELL SPX January 5 1960 Call, currently $1.35. Delta of short call: .07.
- BUY SPX January 5 1970 Call, currently $.75.
- SELL SPX January 5 1820 Put, currently $ 3.20. Delta of short put: -.11.
- BUY SPX January 5 1810 Put, currently $2.40.
It is recommended to place the order as a single entry:SELL " Iron Condor".
Current mid price for all four legs: $1.40. We recommend trying to get filled for the mid or a few cents below; $1.25 is the suggested minimum credit for this trade. Bid/ask prices can sometimes be wide, so there is no guarantee there will be a fill at the current mid price. Some traders may get filled at a better credit, others may have to cave in a bit to get the order executed.
Please note: Traders should always be aware of any news events that may cause a sudden move in the market. If that occurs, it is recommended to immediately cancel the working order until things settle. Depending on the move that may occur, the above strikes may need to be changed to appropriate strikes within the .10 - .15 range. It is each individual's responsibility to select the strikes they feel most comfortable with, depending on trading style and risk tolerance.
Update will be posted with exact position details when the trade is opened.
For those unfamiliar with the strategy, the trade management guidelines for all Couch Potato Trader strategies were updated on August 20, 2015, and can be found here:
Link to Articles
As always, stay keen on your risk management and trade carefully,