The broad market closed lower Friday after a two day Fed-induced rally; the selloff may have been due to sliding oil prices.
Reports that major oil producers are not likely to reach an agreement to freeze production at a meeting this weekend resulted in the largest one-day loss for oil futures since mid-July.
The benchmark index SPX closed down -12.49 points to 2164.69, a drop of .6%. Despite Friday's decline, SPX managed to post a gain for the week of 1.2%.
Below is the open position status:
SPX Weekly Iron Condor
This position was opened on Friday, September 23. Position details below:
SOLD SPX September 30 2200 Call, 1.25 credit.
BOUGHT SPX September 30 2210 Call, .45 debit.
SOLD SPX September 30 2120 Put, 2.20 credit.
BOUGHT SPX September 30 2110 Put, 1.65 debit.
Order was filled as an "Iron Condor" for $1.35 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: $865.
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:
SPX September 30 Iron Condor:
The position is showing a gain of $10 as of the close; the debit to exit is $1.25 according to Think or Swim. The position is well centered and flat delta going into next week. Our orders remain in place to exit for target gain when the debit reaches $.75, or if the max loss reaches 10%.
Below is the SPX chart indicating the short strikes:
SPX 6 month chart
SPY October Iron Condor
This monthly position was opened on Wednesday, September 14. Position details are below:
- SOLD SPY October 221 Call, .56 credit.
- BOUGHT SPY October 226 Call, .09 debit.
- SOLD SPY October 200 Put, 1.13 credit.
- BOUGHT SPY October 195 Put, .71 debit.
Order was filled as an "Iron Condor" for $.89 net credit (all four legs) .
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $411.
Target Gain: 10% of margin/risk.
Max loss: 15% of margin/risk.
Below is the risk graph of the position as of the close Friday:
SPY October Iron Condor:
SPY closed Friday at 215.84; our position is currently showing a gain of $39; very close to target. Our order remains in place to exit when the debit reaches $.48 which would be target gain; or if the max loss reaches 15%.
Below is the SPY chart showing the short strikes:
SPY 6 month chart
The guidelines call for the position to remain open until target gain is reached, as long as SPY stays between the short strikes. They also call for exiting at the pre-set max loss, or if SPY reaches either short strike. It is recommended to have a "good to cancel" conditional order in to exit the position for target gain or max loss. Please follow your broker's specific guidelines on the setup of conditional orders as they can vary by broker.
RUT Iron Butterfly
This monthly position was opened on Thursday, September 22. Position details are below:
- SOLD RUT October 1260 Call, 18.40 credit.
- BOUGHT RUT October 1310 Call, 1.75 debit.
- SOLD RUT October 1260 Put, 22.10 credit.
- BOUGHT RUT October 1210 Put, 8.45 debit.
Order was filled as an "Iron Condor" for $30.30 net credit (all four legs).
Additional Order to cut Deltas on upside:
BOUGHT RUT 1315 Call
Order for extra long call was filled for $1.20.
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: $2,090.
Target Gain: 5% of the gross margin ($250/contract)
Max loss: 10% of the gross margin ($500/contract)
Below is the risk graph as shown on my broker's platform:
RUT October Iron Butterfly:
RUT closed Friday at 1254.62, down -8.82 points or .7%. Our position is showing a gain of $120, so off to a good start.
The adjustment trigger points for this position are if RUT moves up or down 10 points from the center of the Iron Butterfly. Adjustment trigger on the call side would be if RUT reaches 1270. Since we have the extra long call, we can be a little patient with the adjustment depending on the position status and overall market conditions. The downside adjustment would be at approximately 1250, depending on market conditions and position status at the time the trigger is reached. As the trade is also a bit more "friendly" on downside moves, we can be patient as well on making the downside adjustment if the trigger is reached. Remember these are guidelines, not concrete rules, and can be modified as a trader chooses depending on market opinion.
Next week's economic news is summarized below:
10:00 am New Home Sales
10:00 am ECB President Mario Draghi speaks
9:00 pm US Presidential Debate between Hillary Clinton & Donald Trump
9:00 am S P & Case Shiller HPI
10:00 am Consumer Confidence
8:30 am Durable Goods Orders
10:30 am EIA Petroleum Status Report
8:30 am Jobless Claims
8:30 am GDP
8:30 am International Trade-in Goods
8:30 am Personal Income & Outlays
10:00 am Consumer Sentiment
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,