Position Update: SPX Weekly Iron Condor Test Position and SPY Iron Condor Setup for July.
The bulls remained in control Friday; SPX closed at 1949.44, the high of the day and another record closing high.
1)SPX Weekly Iron Condor
Below is the open SPX Weekly Iron Condor test position for the June 2 cycle:
SPX Weekly Iron Condor Test Position:
The position is +$25.03, or 2.8% of the margin. I have set a target gain of 7% of the margin ($63), or max loss of 10% ($100). As this trade is still in the test kitchen mode, it will remain open at least until the middle of next week. It will be exited if target gain or max loss is reached,or if SPX reaches either short strike.
Below is the 6 month chart of SPX, showing the strikes sold.
SPX 6 Month Chart:
2)SPY Monthly Iron Condor for July
Monday will be 37 days to July 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 is not recommended to enter the position. With the volatility at such low levels, it may be necessary to sell at the high end of the recommended range. It is a trader's choice whether or not to accept slightly less credit than $.80 for the lower range delta-wise.
- 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.