Unlucky Friday the 13th? Investors didn't appear to care.
Friday brought modest gains to the broad market as investors approached the long Holiday weekend. The uptrend that was sparked by the US Election results continues, for the time being. The markets are closed Monday for the US Martin Luther King Day holiday.
The benchmark index SPX closed up 4.20 points at 2274.64, a gain of .18%. This close represented a very slightly weekly loss of .1%.
Below is the open position status:
SPX Weekly Iron Condor for January 20 cycle.
This position was opened Friday, January 13; details below:
SOLD SPX January 20 2305 Call, 1.35 credit.
BOUGHT SPX January 20 2315 Call, .65 debit.
SOLD SPX January 20 2245 Put, 1.75 credit.
BOUGHT SPX January 20 2235 Put, 1.20 debit.
Order was filled as an "Iron Condor" for $1.25 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: $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:
SPX January 20 Weekly Iron Condor:
Think or Swim is showing the debit to exit the position is .50, which would be much better than our target exit gain. My order to close at a .65 debit did not fill, so I suspect the closing data is incorrect.
I had an email from one subscriber who was not able to get a fill on this week's trade. Fills on the weekly can be tough at times because of the wide bid/ask prices. This is particularly true on the monthly cycle. It was suggested that perhaps we consider a Thursday entry rather than Friday for the SPX Weekly Iron Condor. Thanks, Jean-Charles for the suggestion. The next time the monthly cycle rolls around for the weekly trade, I will look at entering a day early, depending of course on market conditions and any pending economic news.
Below is the SPX chart showing the short strikes:
SPX 6 month chart
SPY Monthly Iron Condor for February
This position was opened on Monday, January 9. Details below:
- SOLD SPY February 233 Call, .72 credit.
- BOUGHT SPY February 238 Call, .18 debit.
- SOLD SPY February 217 Put, .89 credit.
-BOUGHT SPY February 212 Put, .50 debit.
Order was filled as an "Iron Condor" for $.93 net credit (all four legs) .
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $407.
Target Gain: 10%of margin/risk.
Max loss: 15% of margin/risk.
For some reason I am unable to pull up the option chain this morning to show the actual position. When we entered the position Monday, SPY was trading at the same price as the close Friday, $227, so our position should be holding up well and we will continue to monitor.
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.
Next week's economic news is highlighted below:
Markets closed; U.S. Martin Luther King Holiday
8:30 am Empire State Manufacturing Index
8:45 am Fed's William Dudley speaks
8:30 am Consumer Price Index
9:15 am Industrial Production
10:00 am Housing Market Index
2:00 pm Beige Book
8:30 am Housing Starts
8:30 am Jobless Claims
10:30 am EIA Petroleum Status Report
9:00 am US Presidential Inauguration
Next week is the planned entry for the February RUT Iron Butterfly. Monday will be 32 days to expiration. Depending on market conditions and available credit, we will look to open this position sometime next week.
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,