Crisis in Ukraine? Market appears to have shrugged off Thursday's decline and the tragedy that occurred.
The market began to drop Thursday just before noon, and the day got progressively worse as additional news was released of the missile attack on the Malaysian Airlines jetliner. This occurred shortly after entering the July 4 weekly SPX Iron Condor. I had set the stop loss to exit the position if the debit reached 2.20, which was the max loss of 10%. During the afternoon the price touched 2.20, but my order did not trigger, so the position remained open.
SPX recovered from the dip on Friday to close at 1978.22.
The VIX spiked 25% on Thursday, but as the market rebounded on Friday it already dropped by over 13% by late morning. VIX closed at 12.06, just slightly above the 20 day EMA.
VIX 6 month chart:
Below is the status of the July 4 weekly Iron Condor as of the close Friday:
SPX July 4 Weekly Iron Condor
This 6 month SPX chart shows our short strikes:
SPX 6 month Chart:
The position is currently +$39.96, just over 4%. The target gain is 7% of the margin/risk, or $61. The position will remain open until target gain is reached as long as SPX stays between the short strikes. The position will be exited at target gain, max loss (10%), or either short strike. It will be closed regardless before the end of the day on Thursday, the day before expiration. However, all eyes and ears will be on the Ukraine situation, and I recommend anyone who is in this position be very nimble and quick to exit if it moves against you.
For those of you who follow/trade the monthly SPY Iron Condor, I received an additional response to my inquiry to the CBOE as to why strikes above 200 are not available for the August cycle in 1 point increments:
"The (SEC) rule states that no 1 point strikes are allowed in any classes (excepted for classes that has a rule filling that has been approved by the SEC) over 200. There is a rule filling that was put in for SPY but it has not been approve as of yet." Even if the rule filing were to be approved by early next week, I doubt very much there will still be enough credit to enter an August position. So I will continue to follow up with the CBOE with the hope that they will receive approval to add the strikes we need in time to enter a September position.
Next week brings some note-worth economic news that could impact the market; including:
8:30 am Consumer Price Index
10:00 am Existing Home Sales
10:30 am EIA Petroleum Status Report
8:30 am Jobless Claims
10:00 am New Home Sales
A trade update on the open weekly position will be posted early next week.
As always, trade carefully and stay keen on your risk management,