Summer doldrums continue week after week; when will it break out?
Once again, the broad market pretty much ended the week where it began. The overall market closed slightly lower Friday, as investors ponder the possibility of the Fed raising interest rates at their upcoming meeting in September. The benchmark index SPX closed down 3.15 points at 2183.87, flat for the week.
Below is the open position status:
SPX August 26 Weekly Iron Condor
This position was opened Friday, August 19, as follows:
SOLD SPX August 26 2205 Call, 1.00 credit.
BOUGHT SPX August 26 2215 Call, .45 debit.
SOLD SPX August 26 2140 Put, 3.10 credit.
BOUGHT SPX August 26 2130 Put, 2.35 debit.
Order was filled as an "Iron Condor" for $1.30 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: $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 +$30 at the close, and slightly negative delta so should benefit if we get a mild pullback 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%.
SPX August 26 Iron Condor:
Below is the 6 month chart showing the short strikes:
SPX 6 month chart
RUT Monthly Iron Butterfly for September
This position was opened Monday, August 15, details are below:
- SOLD RUT September 1240 Call, 18.80 credit.
- BOUGHT RUT September 1290 Call, 2.25 debit.
- SOLD RUT September 1240 Put, 20.30 credit.
- BOUGHT RUT September 1190 Put, 7.19 debit.
Order was filled as an "Iron Condor" for $29.75 net credit (all four legs).
Additional Order to cut Deltas on upside:
BOUGHT RUT September 1300 Call
Order for extra long call was filled for $1.35.
Margin/Risk is calculated by the width of the wings ($5,000), less credit received, plus the cost of the extra long call.
Margin for this trade at entry: $2,160.
Target Gain: 5% of the gross margin ($250/contract)
Max loss: 10% of the gross margin ($500/contract)
On Wednesday, August 17, RUT reached the downside adjustment trigger of 1230, and the position was adjusted as follows:
BOUGHT RUT September 1240 Put, 30.40 debit.
SOLD RUT September 1190 Put, 11.60 credit.
SOLD RUT September 1220 Put, 20.20 credit.
BOUGHT RUT September 1170 Put, 7.40 debit.
Net debit (all four legs): $6.00
The position summary after the adjustment is as follows:
SHORT September 1240 Call
LONG September 1290 Call
SHORT September 1220 Put
LONG September 1170 Put
LONG September 1300 Call bought at trade entry to cut position delta.
The position is now a 20 point wide Iron Condor.
Below is the risk graph as of the close:
RUT September Iron Condor:
RUT continues to march higher after the slight dip causing us to have to adjust to the downside; it closed Friday -.08 at 1236.76.
The next adjustment trigger point will be either short strike, depending on overall position status and market conditions.
Below is the RUT 6 month chart:
RUT 6 month chart:
Next week's economic news is summarized below:
10:00 am New Home Sales
9:45 am PMI Manufacturing Index
10:00 am Existing Home Sales
10:30 am EIA Petroleum Status Report
8:30 am Jobless Claims
8:30 am Durable Goods Orders
8:30 am GDP
8:30 am International Trade-in Goods
9:45 am PMI Services Flash Index
10:00 am Consumer Sentiment
11:00 am Fed Chair Janet Yellen speaks at Kansas City Fed's monetary policy symposium
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,