New Trade Entry: SPX Weekly Iron Condor for March 2; order filled.
Weekly SPX Iron Condor order filled.
Order executed for this week's position:
- SOLD SPX March 2 2125 Call, 1.25 Credit.
- BOUGHT SPX March 2 2135 Call, .35 Debit.
- SOLD SPX March 2 2045 Put, 2.55 Credit.
- BOUGHT SPX March 2 2035 Put, 1.90 Debit.
Order filled for $1.55 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: $845.
Target Gain: 7% of margin/risk or $60.
Max loss: 10% of margin/risk or $85.
Below is the risk graph of this week's position as shown on my broker's platform:
SPX March 2 Weekly Iron Condor:
Below is the SPX chart showing the short strikes:
SPX 6 month chart
Please note that since this order was executed, SPX has dropped from 2090 when the order filled, and is currently at 2084.27 as of this writing. The trade guidelines call for holding off on new entry if SPX has moved one standard deviation in either direction (currently 16 points according to my broker's calculation). For those entering this trade that have not been filled, it is recommended to wait until later in the day before entering the position. Since this order has been filled, I will manage it as per the trade plan and the guidelines.
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.
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,