SPX surged to the biggest weekly gain in a month, good for investors overall but causing our stop to be hit on the SPX Weekly Iron Condor.
The benchmark index SPX posted the biggest weekly gain in a month; the close Friday at 2072.79 represented a gain of 13.05 points or .63%. The rally was fueled by the March jobs report, which showed better-than-expected gains.
Below is a summary of our open positions:
SPX Weekly Iron Condor
The weekly SPX Iron Condor for the April 2 cycle was entered Friday. Shortly after the trade was opened, the rally surged SPX higher and our stop loss was hit. The position was closed as follows:
- BOUGHT SPX April 2 2085 Call, 4.40 debit.
- SOLD SPX April 2 2095 Call, 2.30 credit.
- BOUGHT SPX April 2 1995 Put, .65 debit.
- SOLD SPX April 2 1985 Put, .40 debit.
Net debit: (all four legs) 2.35
Net credit to open the position: (all four legs) 1.40 credit.
The closing represented a loss of $.95, our pre-set max loss for the trade.
Results for the first quarter of this year are favorable for the weekly Iron Condor despite this week's loss; I will publish results for all the Couch Potato Trader plays sometime this week.
With SPX closing Friday at 2072, it is approaching major resistance in the 2075 area. While it is quite possible the bulls will propel it higher, we could also see a battle next week as the bears may try to take it down.
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.
On Thursday, March 17, with SPX trading at 2034, a small adjustment was made to smooth the upside T +0 line. Adjustment details are below:
- SOLD (2) SPX May 1 1915 Puts, 13.40 credit.
- BOUGHT (2) SPX May 1 1895 Puts 11.10 debit.
- SOLD (2) SPX May 1 1825 Puts, 5.80 credit.
- BOUGHT (2) SPX May 1 1845 Puts, 6.90 debit
The adjustment filled for a net credit (all four legs) of $1.20
The risk graph as of the close Friday is shown below:
SPX May 1 Bearish Butterfly:
The position is flat delta, which is expected, and currently at a $100 gain. We will continue to let it work as per the guidelines. Unless there is a significant pullback next week, we will most likely roll the third contract similarly to the first two.
Trade updates will be posted as appropriate.
Next week's economic news is summarized below:
10:00 am Factory Orders
8:30 am International Trade
10:00 am ISM Non Manufacturing Index
10:30 am EIA Petroleum Status Report
2:00 pm FOMC Minutes
8:30 am Jobless Claims
As always, stay keen on your risk management and trade carefully,