The rebound continues, will it last through FOMC next week?

Friday's bullish close was good for one of the open positions, not so good for the other. Diversity is what it's all about in trading, so I am happy we have a monthly trade on both RUT and SPY.

Below is the status of our current open positions:

1) SPY November Iron Condor

The position summary is as follows:

SHORT November 200 Call.

LONG November 205 Call.

SHORT November 176 Put.

LONG November 171 Put.

Below is the risk graph of the current position as of the close Friday:

SPY November Iron Condor

The position is currently -$41 as of the close; SPY closed at 196.43 so our short call strike at 200 is a bit under 4 points away. We will watch the position very carefully if next week is bullish, and will exit if SPY reaches the short call strike, or if the position reaches the pre-set max loss of 15% of margin, or -$63.

The chart below shows the short strikes:

SPY 6 month chart

2) RUT November Iron Butterfly

The position summary is as follows:

SHORT November 1120 Call.

LONG November 1170 Call.

SHORT November 1120 Put.

LONG November 1070 Put.

Below is the risk graph of the current position as of the close Friday:

RUT November Iron Butterfly

RUT closed at 1,118.82, up a bit over 2 points or .21% from the previous day, slightly negative delta and just below the short strike of 1120. The position is currently +$50. Target gain remains at 5% ($250), and max loss at 10% ($500). Adjustment trigger points are 1130 on the upside, or "approximately" 1110 on the downside. As we saw last week, we can be more flexible on the downside adjustment, as the Iron Butterfly tends to be negative delta by nature. Downside adjustment will depend on the position status and overall market conditions at the time the trigger is hit.

The 6 month chart for RUT is below; with any luck we will see a period of consolidation at this level so theta can work for us.

RUT 6 month chart

The six month chart of the VIX is below; since coming off the highs of earlier in the week, it seems to be consolidating at around 16, closing Friday at 16.11, basically flat from the previous day.

VIX chart:

Next week is a heavy week of economic news, including the FOMC meeting and announcement Wednesday afternoon. A recap of the week's events follows:


10:00 am Pending Home Sales

10:30 am Dallas Fed Manufacturing Survey


FOMC meeting begins

8:30 am Durable Goods Orders

9:00 am S & P Case-Schiller HPI

10:00 am Consumer Confidence


10:30 am EIA Petroleum Status Report

2:00 pm FOMC Meeting Announcement


8:30 am Jobless Claims

8:30 am GDP


8:30 am Personal Income and Outlays

9:45 am Chicago PMI

9:55 am Consumer Sentiment

As far as a new weekly trade is concerned for the November 1 cycle, the earliest I would consider venturing in would be Friday of next week after all the week's economic news is digested.

Position updates will be posted as appropriate.

As always, stay keen on your risk management and trade carefully,

Dot Hazlin