SPX Weekly Credit Spread for Feb 2 and IWM Iron Condor setup for March
1) SPX Weekly Credit Spread for February 2.
The position was entered with SPX at 1787. Shortly after entry, the market rocketed up another 10 points, with SPX closing at 1797.02. The closing price was up 23 points from the previous day. With such a parabolic move yesterday, I do have a concern of a partial retracement on Monday. I am hopeful that the retracement will be a small one (if any), along with the weekend decay, so the position wonâ€™t be threatened. I will be super vigilant on this position on Monday and very nimble to close if there is a significant retracement.
Below is the current position:
SPX Weekly Credit Spread for Feb2:
The position is +$35.00, or 3.8% of the margin. Target gain remains at 56.25. I will close the position for either .20 or .15, depending on market conditions.
2) IWM Iron Condor for March
Looking ahead to the March cycle for a monthly position, I have begun to look at a March IWM Iron Condor. Monday is 39 days prior to expiration; so a new position could be entered any day next week.
IWM closed Friday at 110.75. The guidelines call for the short strike to be at a delta of .15 - .20. Based on the closing price, the current strikes recommended would be:
Calls: -117/+122 â€“ Current delta of the 122 call is .16
Puts: -102/+97 â€“ Current delta of the 102 put is -.15
This example is shown in the graph below:
IWM March Iron Condor Example:
The current credit for this sample position is .79. The minimum credit recommended for this trade entry is $.80, so I would not enter this position until there was sufficient credit. The illustration is just an example for planning purposes. Some traders may choose to be more aggressive and sell spreads with a higher delta on the short for more credit. However, being the more conservative trader that I am; I will go as wide as possible as long as I can still get the minimum credit of .80 and look for the lower end of the recommended delta-range.
Depending on the entry day and time, the deltas and short strikes will likely be different than outlined above.
The target gain on the monthly Iron Condor is 10% of actual margin/risk, and the maximum loss is 15%.
I will post entry details next week when the position is opened.
As always, trade carefully and stay keen on your risk management.