News reports of Russia ending military exercises Friday sent the market soaring.
The day began on a relatively quiet note, but quickly changed mid-day when the tension between Russia and Ukraine appeared to be easing. SPX closed yesterday at 1931.59, up 22 points or 1.17%. Below is the open Iron Condor for the August cycle:
SPX August Weekly Iron Condor
The chart below shows our short strikes:
SPX 6 month chart
The position is currently +$27.51. Our target gain remains at $70, 7% of the margin/risk of $870.
Putting the international geopolitical issues aside, next week is a light week for economic news:
8:30 am Retail Sales
10:00 am Business Inventories
10:30 am EIA Petroleum Status Report
Because this week's position is the regular monthly cycle, the last day to trade it is next Thursday. I never like going to expiration day, so it is recommended to exit the position before the end of the day on Wednesday.
New trade entry: SPY monthly Iron Condor for September.
Monday will be 39 days prior to September expiration, so the plan is to enter the monthly Iron Condor sometime next week. I do see where there are now 2.5 point increments in the strikes over 200, so hopefully we will be able to select the appropriate strikes according to the guidelines. To summarize the trade setup and management:
- Sell a short strike with a delta in the .15 - .20 range.
- Buy a long strike 5 points from the short strike.
Minimum credit (for both sides) should be at least $.80, or it is not recommended to open the trade. More aggressive traders may choose a short strike closer to the high end of the range for more credit. However, being the conservative trader I am, I will look to enter with the delta of the short strike closer to .15.
- 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.
- Max loss is 15% of the margin, or $63 using this same example.
The 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 in reached. The position will be closed at either short strike, or the pre-set 15% max loss.
I will post entry details when the position is opened. A trade update on the SPX weekly Iron Condor will be posted next week also.
As always, stay keen on your risk management and trade carefully,