Today's continued rally touched on two month highs; the bulls are out in full force for now.
The broad market closed higher for the fourth straight day Friday as crude oil prices climbed and official data showed jobs growth in February was stronger than economists' expected.
The monthly non farms payroll report released Friday morning indicated that the US added 242,000 new jobs in February, recovering from a hiccup in January that raised questions about whether the pace of hiring was tapering off.
The unemployment rate, meanwhile, held steady at 4.9%, even as more than half a million people joined the labor force.
The benchmark index SPX closed up 6 points at 1999.91, up .3% and clocked in its third weekly gain.
Below is a summary of our open positions:
SPX Weekly Iron Condor
- SOLD SPX March 2 2035 Call, 1.75 Credit.
- BOUGHT SPX March 2 2045 Call, .90 Debit.
- SOLD SPX March 2 1920 Put, 2.05 Credit.
- BOUGHT SPX March 2 1910 Put, 1.50 Debit.
Order was filled as an "Iron Condor" for $1.40 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: $860.
Target Gain: 7% of margin/risk or $60.
Max loss: 10% of margin/risk or $86.
Below is the risk graph of this week's position as shown on my broker's platform:
SPX March 2 Weekly Iron Condor:
The position is slightly under water by $(20). Our order remains in place to close it for .80 which would be target gain, or 2.25 which would be max loss. The position is negative delta and should benefit from a pullback early next week.
Below is the SPX chart showing the short strikes:
SPX 6 month chart
New Test Kitchen Trade; SPX Bearish Butterfly
This new trade was entered in Paper Money Wednesday, February 24. Position details are below:
- BOUGHT 3 SPX May 1 1915 Put, 73.40 debit..
- SOLD 6 SPX May 1 1875 Put, 58.10 credit.
- BOUGHT 3 SPX May 1 1825 Put, 43.40 debit.
Order was filled as a "Butterfly" for $.60 net debit(all three legs) per butterfly.
Margin/Risk is calculated at $1,000 per unit, plus the cost of the butterfly,
Margin/Risk for this trade: $3,180.
Target Gain: $500 for the 3-unit position
Max loss: $750 for the 3-unit position
As stated in the guidelines published February 17, the target gain and max loss may be modified depending on length of time in the trade, etc. Since this is a new trade being incorporated into the plan, we will evaluate progress as time goes on.
Below is the risk graph of this position as of the close Friday:
SPX May 1 Bearish Butterfly:
The position is flat delta, which is expected, and a little above breakeven. We will continue to let it work as per the guidelines.
Trade updates will be posted as appropriate.
Next week's economic news is summarized below:
10:30 am EIA Petroleum Status Report
8:30 am Jobless Claims
8:30 am Import/Export Prices
Next week is the planned entry for the SPY Iron Condor for the April monthly cycle. Monday will be 39 days to expiration; so we will plan to enter the position sometime next week depending on market conditions and available credit. For those unfamiliar with the trade, guidelines were last posted on August 20, 2015, and the article can be found at this link: Link to Articles
Updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,