CORRECTION BELOW: Exit target on SPX Weekly Iron Condor $.65
I apologize for any confusion and thanks to one of our subscribers for bringing this to my attention.
Fed speakers scared the bulls, sending them into hiding as the trading week closed.
The broad market closed mostly lower Friday, after Fed speakers lead investors to believe that a September rate hike may be coming closer to reality.
The benchmark index SPX closed at 2169.04, -3.43 points or -.2%. The close followed a 16 point drop earlier in the day, then rallying back 12 points off the low of 2160.39.
Below is the open position status:
SPX September 2 Weekly Iron Condor
This position was opened Friday, August 26, as follows:
SOLD SPX September 2 2210 call, 1.45 credit.
BOUGHT SPX September 2 2220 call, .50 debit.
SOLD SPX September 2 2125 Put, 1.55 credit.
BOUGHT SPX September 2 2115 Put, 1.25 debit.
Order was filled as an "Iron Condor" for $1.25 net credit (all four legs). This is the minimum recommended credit for trade entry.
Margin/Risk is calculated by the width of the wings ($1,000), less credit received.
Margin/Risk for this week's trade: $875.
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 +$15 at the close, and fairly well centered going into next week. Our exit order remains in place to close the position for a debit of $.65 which would be target gain, or for the pre-set max loss of 10%.
SPX September 2 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
On August 23, RUT reached the short call strike of 1240 and was adjusted as follows:
Upside Adjustment August 23:
BOUGHT RUT September 1240 Call, 22.00 debit.
SOLD RUT September 1290 Call, 2.05 credit.
SOLD RUT September 1260 Call, 10.40 credit.
BOUGHT RUT September 1310 Call, .70 debit.
Net debit (all four legs): $10.25
The position summary after the adjustment is as follows:
SHORT September 1260 Call
LONG September 1310 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 40 point wide Iron Condor.
Below is the risk graph as of the close:
RUT September Iron Condor:
RUT closed Friday at 1238.03, -1.97 points or -.16%. The position is well centered between the short put strike of 1220 and short call strike of 1260, currently -$97 so we will continue to let theta work and hope for a break into positive territory soon.
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 showing the short strikes:
RUT 6 month chart:
Next week's economic news is summarized below:
8:30 am Personal Income & Outlays
9:00 am S & P Case Shiller HPI
10:00 am Consumer Confidence
8:15 am ADP Employment Report
9:45 am Chicago PMI
10:00 am Pending Home Sales
10:30 am EIA Petroleum Status Report
8:30 am Jobless Claims
8:30 am Productivity & Costs
10:00 am ISM Manufacturing Index
10:00 am Construction Spending
8:30 am Employment Situation Report
8:30 am International Trade
10:00 am Factory Orders
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,