Volatility continues to rise as concerns increase over geopolitical issues and the potential for conflict with North Korea.
The broad market sold off Thursday, the last day of the Holiday-shortened trading week as investors' concerns increased over possible weekend events in North Korea. The benchmark index SPX closed down -15.98 points at 2328.95, a drop of -.68%.
The volatility index VIX rose steadily through the week, the close Friday at 15.96 represented an increase of 23% from the low on Monday.
VIX 6 month chart
With the long weekend upon us, we will hope for the best with regards to the potential for military action in N. Korea, and deal with what the market brings to us on Monday. I did advise caution for those entering the SPX Weekly Iron Condor, so perhaps some subscribers chose to sit on the sidelines this weekend.
Below is the open position status:
SPX Weekly Iron Condor for the April 21 cycle
This position was opened Thursday, April 13; details below:
SOLD SPX April 21 2375 Call, 1.80 credit.
BOUGHT SPX April 21 2385 Call, 1.05 debit.
SOLD SPX April 21 2295 Put, 2.30 credit.
BOUGHT SPX April 21 2285 Put, 1.75 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 of this week's position as of the close Friday:
SPX April 21 Weekly Iron Condor:
Think or Swim is showing the position -($25) at the close, and slightly long delta. Our order remains in place to exit the position when the debit reaches $.70 which would be target gain, or if the loss reaches 10%.
Below is the SPX chart showing the short strikes:
SPX 6 month chart
SPY May Monthly Iron Condor
This position was opened on Monday, April 10; details below:
- SOLD SPY May 243 Call, .54 credit.
- BOUGHT SPY May 248 Call, .10 debit.
- SOLD SPY May 225 Put, 1.02 credit.
- BOUGHT SPY May 220 Put, .65 debit.
Order was filled as an "Iron Condor" for $.81 net credit (all four legs) .
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $419.
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 May Iron Condor:
As of the close Friday, Think or Swim is showing the position a bit above breakeven, +$3.00.
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:
10:00 pm China's Industrial Production Report
8:30 am Empire State Manufacturing Index
10:00 am Housing Market Index
8:30 am Housing Starts
9:00 am Fed's Esther George speaks
9:15 am Industrial Production
10:30 am EIA Petroleum Status Report
12:30 pm Fed's Eric Rosengren speaks
2:00 pm Beige Book
8:30 am Jobless Claims
8:30 am Philadelphia Fed Business Outlook
9:00 am Fed's Neel Kashkari speaks
10:00 am Existing Home Sales
For those unfamiliar with the strategies we trade, the trade management guidelines for all the Couch Potato Trader plays 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,