SPX Weekly Credit Spread for May and SPY Iron Condor for June
1) SPX Weekly Credit Spread for May.
Below is the current position as of the close Friday:
SPX Weekly Credit Spread for May:
The position is +$30.00, or 3.3% of the margin. Target gain remains at 67.50. My OCO order remains in place to close the position for target gain ($.20), or the pre-set max loss ($1.80).
Below is the 6 month chart of SPX, showing the strikes of our spread. SPX closed Friday at 1878.48, so our short put strike of 1840 is currently 38 points away.
SPX 6 Month Chart:
2)SPY Monthly Iron Condor for June
Monday will be 39 days to June expiration, so I will look to open this monthly position sometime next week.
To recap the guidelines for this trade entry:
- Sell a short strike with a delta in the .15 - 20 range.
- Buy a long strike 5 points away from the short.
Minimum credit (for both sides) should be at least .80, or it not recommended to enter the position.
- Target gain is 10% of the actual margin/risk. This is calculated by the width of the wings (5 points in this case = $500), less the actual credit received. For a one-contract trade using the minimum credit of $.80, the margin/risk is $420. Target gain in this example is $42.
- Maximum loss is 15% of the margin, or $63 using this same example.
- This position will be traded as a "no touch"; it will remain open as long as SPY remains between the short strikes, until the target gain is reached. The position will be exited at either short strike or the pre-set 15% max loss.
Having said that, it is a traderâ€™s individual decision whether to wait for target gain, or max loss, on any position. Trading is a blend of oneâ€™s individual style, risk tolerance, and intuition. This combination can help reach your annual trade plan results. I recommend following your own trade style; there is nothing wrong with exiting a position early. Remember, trading is an art, not a science.
I will post entry details next week when the position is opened.
As always, trade carefully and stay keen on your risk management.