The Trump era has begun, now it's time to live up to his promises.
Inauguration Day went without a hitch despite numerous protests, but thankfully there we no major problems with the change in the US Presidential administration.
The day began quite bullish, but the broad market settled off of the day's high following President Trump's inauguration speech. The day ended with modest gains overall, but most indices did post their second weekly loss in a row. The benchmark index SPX closed up 7.62 points at 2271.31, a gain of .3%.
Below is the open position status:
We did not enter theSPX weekly Iron Condor this week, so the only open position on is the RUT February Iron Butterfly. We will start testing a Thursday entry for the SPX weekly Iron Condor next week for the February 3 cycle.
RUT February Iron Butterfly
This position was opened on Tuesday, January 17. Position details below:
- SOLD RUT February 1360 Call, 26.90 credit.
- BOUGHT RUT February 1410 Call, 6.65 debit.
- SOLD RUT February 1360 Put, 25.30 credit.
- BOUGHT RUT February 1310 Put, 10.80 debit.
Order was filled as an "Iron Condor" for $34.75 net credit (all four legs).
Additional Order to cut Deltas on upside:
BOUGHT RUT February 1460 Call
Order for extra long call was filled for $1.15.
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: $1,640.
Target Gain: 5% of the gross margin ($250/contract)
Max loss: 10% of the gross margin ($500/contract)
Below is the risk graph as of the close Friday:
RUT February Iron Butterfly:
The after-hours figures show the position is well above our target gain, but I do not trust the numbers so we will see what things look like after the open Monday. RUT closed up yesterday 6.10 points at 1351, a gain of .45%.
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 1370. 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. In addition. The downside adjustment would be at approximately 1350, 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.
Yesterday before the open RUT had reached the downside adjustment trigger point, but as I wrote in the update yesterday that because the downside breakeven is at 1326, we will monitor the downside carefully and have modified our lower adjustment trigger to 1335 - 1340. Remember these are guidelines, not concrete rules, and can be modified as a trader chooses depending on market opinion.
Below is the RUT 6 month chart:
RUT 6 month chart:
Next week's economic news is highlighted below:
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 International Trade In Goods
10:00 am New Home Sales
8:30 am Durable Goods Orders
8:30 am GDP
10:00 am Consumer Sentiment
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,