Intra-day market movement continues to be volatile; not the best environment for the SPX Weekly Iron Butterfly.
As of this writing, SPX is in a strong down-move once again, down over 16 points, or 1.37 standard deviations. In the last 6 trading days, SPX has moved up or down more than 1, one-day standard deviations during the trading day. This is outside our guidelines for trade entry for both the weekly Iron Butterfly and Put Credit Spread. For those of you interested in learning more about what a standard deviation is, I would recommend reading the article Linda Piazza posted in the Options 101 newsletter on May 24. Her article gives some very informative, basic information on understanding what can sometimes be a confusing term.
Because of the current market conditions over this past week, I am not recommending the SPX weekly Iron Butterfly for the June 1 cycle (option code SPXW130607, expiring June 7) for a live trade entry on Thursday. I feel these conditions warrant "sitting on the sidelines", or better yet, continue to back-test and paper trade the trade.
Cash is a position, and sometimes it's best to sit out a week; "live to trade another day" rather than to risk entry in less-than-ideal market environment.
If the market conditions are within our guidelines, I will enter the SPX Weekly Put Credit Spread on Thursday. I have also been trading this same strategy on RUT, and plan to enter a position on RUT tomorrow or Friday. A trade update will be posted with entry details. Trade guidelines are the same for both SPX and RUT; please refer to the article published on May 12, 2013. The link can be found here: Link to Articles