I have been testing a weekly Iron Condor on SPX that I want to share with you.
As an alternative, or in addition to, the weekly Iron Butterfly on SPX, some of you may like to trade an Iron Condor on a weekly basis. I have been backtesting and paper trading this strategy; it is NOT recommended to trade it live yet. However, I wanted to share the guidelines with you so that you can begin backtesting and paper trading it on your own. The basic guidelines are:
Entry Day: Tuesday for the next cycle, 10 days to expiration.
Time of entry: After 1:30 pm est.
Trade entry: Sell short Call and short Put with delta less than 20. Buy long Call 25 points above short strike, and buy long Put 30 points below short strike.
Target gain: 60% of credit received
Max loss: 100% of credit received
Adjustment plan: There are two scenarios I am testing:
1) if SPX gets to within 10 points of short strike on either side, roll threatened side spreads out 10 points. After this one adjustment, there are no further adjustments to the position.
2) With this scenario, there are no adjustments - exit the trade at target gain or max loss.
As of this writing (Tuesday before the open), an example of this trade is pictured below:
SPX Weekly Iron Condor Example
Call strikes: -1620/+1645. The 1620 Call delta is 16.
Put strikes: -1555/+1525. The 1555 Put delta is -17.
Based on the credit of $4.05, the 60% target gain is $243. 100% max loss of $405.
The above strikes and credit are for illustrative purposes only; and will most likely be different at the time of trade entry.
I traded this strategy one time live a few weeks ago, and reached target gain. I am not currently trading it live. My goal is to continue testing on this trade, and give a recommended trade entry in the next few weeks. I will share my backtesting results next week. In closing, I want to stress that it is not recommended to place this trade live for this cycle; but an excellent opportunity to backtest it or paper trade to begin to get a feel for the weekly Iron Condor.