Another bumpy ride, but the end result was positive.
The broad market closed flat yesterday, but managed to post the best weekly gain since last November. It may be too early to presume we are entering a calmer trading environment, but I don't recall a Friday in recent weeks that ended so quietly. Below is a summary of our open positions:
SPX Weekly Iron Condor
Order executed for this week's position:
- SOLD SPX February 4 1970 Call, 1.50 Credit.
- BOUGHT SPX February 4 1980 Call, .70 Debit.
- SOLD SPX February 4 1840 Put, 3.20 Credit.
- BOUGHT SPX February 4 1830 Put, 2.65 Debit.
Order was filled as an "Iron Condor" for $1.35 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: $865.
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 4 Weekly Iron Condor:
SPX closed Friday at 1918, unchanged for the day. The position is up slightly, and slightly negative delta going into next week. The current debit as of the close to exit the position is $1.15; our order remains in place to close it for .75 which would be target gain, or 2.20 which would be max loss.
Below is the SPX chart showing the short strikes:
SPX 6 month chart
SPY March Iron Condor
This position was entered on Tuesday, February 9. Details are below:
- SOLD SPY March 200 Call, .58 Credit.
- BOUGHT SPY March 205 Call, .17 Debit.
- SOLD SPY March 168 Put, 1.54 Credit.
- BOUGHT SPY March 163 Put, 1.00 Debit.
Order was filled as an "Iron Condor" for $.95 net credit (all four legs).
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $405.
Target Gain: 10%of margin/risk.
Max loss: 15% of margin/risk.
Below is the risk graph as of the close Friday:
SPY March Iron Condor
This monthly position is also slightly negative delta, and holding its own considering the wild market. The position will be closed at target gain of 10%, or if SPY reaches either short strike.
Below is the SPY chart showing the short strikes:
SPY 6 month chart
RUT March Iron Butterfly
This monthly position was opened on Thursday, February 18. Entry details are below:
- SOLD RUT March 1010 Call, 25.70 credit.
- BOUGHT RUT March 1060 Call, 6.30 debit..
- SOLD RUT March 1010 Put, 29.80 credit.
- BOUGHT RUT March 960 Put, 13.00 debit.
Order was filled as an "Iron Condor" for $36.20 net credit (all four legs).
BOUGHT RUT February 1100 Call.
Call order was filled for $1.15 debit
Margin/Risk is calculated by the width of the wings ($5,000), less credit received plus the cost of the long call.
Margin/Risk for this trade: $1,495.
Target Gain: 5% of the gross margin ($250/contract)
Max loss: 10% of the gross margin ($500/contract)
Below is the risk graph of this position as shown on my broker's platform:
RUT March Iron Butterfly:
RUT closed Friday at 1010, up 5 points and right at the center of our position. The position is up slightly, so off to a good start.
The adjustment trigger points for this position are if RUT moves up or down 10 points. Adjustment point on the call side would be if RUT reaches 1020, and the downside adjustment would be at 1000. Note that the actual adjustment trigger on the downside may be slightly below 1000, depending on market conditions and position status at the time RUT hits 1000. Because the Iron Butterfly is negative delta by nature, we can often wait a bit longer to adjust on the downside. Also, because we have the long call we can also be a bit patient on the upside adjustment, again depending on position status and overall market.
New Trade for Next Week
I posted the guidelines last week for the new, longer-term bearish butterfly I plan to incorporate into the newsletter. Depending on market conditions early next week, I may venture into this position and will post recommended trade entry. As with any new position, it is always recommended to trade with Paper Money until you are totally comfortable with the position, adjustment plan, and risk.
Next week's economic news is summarized below:
9:45 am PMI Manufacturing Index
9:00 am S & P Case Shiller HPI
10:00 am Consumer Confidence
10:00 am Existing Home Sales
10:00 am New Home Sales
10:30 am EIA Petroleum Status Report
8:30 am Durable Goods Orders
8:30 am Jobless Claims
8:30 am GDP
8:30 am Personal Income & Outlays
10:00 am Consumer Sentiment
Updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,