Consolidation continues; a boring market can be good for non-directional traders.
The broad market pretty much ended the week where it began, as the summer doldrums continue. The benchmark index SPX closed down -1.74 points Friday, less than 0.1%, at 2184.05.
Below is the open position status:
SPX August 19 Weekly Iron Condor
This position was opened Friday, August 12, as follows:
SOLD SPX August 19 2210 Call, 1.10 credit.
BOUGHT SPX August 19 2220 Call, .40 debit.
SOLD SPX August 19 2145 Put, 2.05 credit.
BOUGHT SPX August 19 2135 Put, 1.45 debit.
Order was filled as an "Iron Condor" for $1.30 net credit (all four legs).
I received an email from a subscriber who was disappointed he was not able to get filled. While the bid/ask prices on SPX are always wide, they are even more so on the monthly cycle. It appears that my fill at $1.30 was a lucky one, my order must have been in at just the right moment. For those of you who may not have been filled, there will be another trade entry next week.
Margin/Risk is calculated by the width of the wings ($1,000), less credit received.
Margin/Risk for this week's trade: $870.
Target Gain: 7% of margin/risk or $60.
Max loss: 10% of margin/risk or $85.
Below is the risk graph as of the close Friday:
The position is showing +$40 at the close, and flat delta so should benefit if the market gives us a quiet open on Monday. Our exit order remains in place to close the position for a debit of $.70 which would be target gain, or for the pre-set max loss of 10%. It is recommended to exit the position before the FOMC minutes are released Wednesday afternoon. There is sometimes volatility associated with this news, and a sudden move against the position would leave little time to recover.
SPX August 19 Iron Condor:
Below is the 6 month chart showing the short strikes:
SPX 6 month chart
Next week's economic news is summarized below:
8:30 am Empire State Manufacturing Index
10:00 am Housing Market Index
8:30 am Consumer Price Index
8:30 am Housing Starts
9:15 am Industrial Production
10:30 am EIA Petroleum Status Report
2:00 pm FOMC Minutes
8:30 am Jobless Claims
8:30 am Philadelphia Fed Business Outlook
Next week is the planned entry for the September RUT Iron Butterfly. We will look to enter sometime next week depending on market conditions and available credit.
For those unfamiliar with the strategies we trade, 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,