We will let the market settle on Thursday before entering a weekly SPX and/or RUT credit spread for the June 4 cycle, which expires June 28.
There has been a lot of speculation about what the FOMC meeting announcement and subsequent press conference may do the the market this afternoon. We are currently in our "cash" position to sit out the news, but are looking ahead to a new trade entry for tomorrow (Thursday) and/or Friday.
I plan to enter both an SPX and RUT credit spread for the June 4 cycle. The Option Code is 130628. I will likely wait until the afternoon to enter, giving the market time to settle. I may also diversify my entry a bit, and enter one position Thursday and the other one Friday.
The original guidelines for the weekly credit spreads were published on May 12. For anyone not familiar with the guidelines, the article can be found here: Link to Articles
Since I wrote the guidelines, there have been several modifications to give traders more flexibility with this strategy:
- The trade can be entered any day of the week for the next week's cycle; it is a trader's choice when to enter, as long as a minimum of .75 credit is available.
- If the underlying price is above the 20 Day Moving Average, sell a Put Credit Spread.
- If the underlying price is below the 20 Day Moving Average, sell a Call Credit Spread.
- I do not recommend selling a short strike with a delta above 15. More aggressive traders may choose to do so, but I personally will give up some credit to be farther away from the underlying.
A trade update will be posted with entry details.
As always, stay keen on your risk management and trade carefully,