New Trade Entry: SPX Weekly Iron Condor for February 2; order filled.
Weekly SPX Iron Condor order filled.
Order executed for this week's position:
- SOLD SPX February 2 2105 Call.
- BOUGHT SPX February 2 2115 Call.
- SOLD SPX February 2 2010 Put.
- BOUGHT SPX February 2 2000 Put.
Order was filled as an "Iron Condor" for $1.40 net credit (all four legs).
Margin/Risk is calculated by the width of the wings ($1,000), less credit received.
Margin/Risk for this week's trade: $860.
Target Gain: 7% of margin/risk or $60.
Max loss: 10% of margin/risk or $86.
Below is the risk graph of this week's position as shown on my broker's platform:
SPX February 2 Weekly Iron Condor:
Below is the SPX chart showing the short strikes:
SPX 6 month chart
The guidelines call for the position to remain open until target gain is reached, as long as SPX stays between the short strikes. They also call for exiting at the pre-set max loss, or if SPX reaches either short strike.
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 with weekly trades, there are 52 opportunities in a year to trade so it is important to be comfortable with your trade size and position. Remember, trading is an art, not a science.
Please note: Immediately after this order filled, SPX moved up about 4 more points from the time I entered. Traders entering this position may want to consider moving both the short strikes up 5 points. The credit for the position with short calls at 2110 and short puts at 2015 is currently listed at a mid of $1.25, the minimum credit recommended for trade entry.
For those unfamiliar with the strategy, the trade management guidelines were updated on August 7, 2014, and can be found here:
Link to Articles
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,