Investors worldwide await the "Brexit" vote next week.
There are so many headlines surrounding the upcoming vote in the UK next week, to include them all would make this weekend's update too long for most subscribers to endure. In summary, investors are watching, and waiting, to see what the impact of the outcome of the vote may have on the market. Last week was a volatile week, and we will likely see more of the same heading into next week.
We decided to keep cash as our position and not enter any new plays prior to the vote. We do have the SPY July Iron Condor open that we will continue to monitor.
Below is the open position status:
SPY June Iron Condor
This monthly position was opened on Monday, June 6. Position details are below:
- SOLD SPY July 217 Call, .37 credit.
- BOUGHT SPY July 222 Call, .06 debit.
- SOLD SPY July 201 Put, 1.21 credit.
- BOUGHT SPY July 196 Put, .70 debit.
Order was filled as an "Iron Condor" for $.82 net credit (all four legs) .
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $418.
Target Gain: 10% of margin/risk.
Max loss: 15% of margin/risk.
Below is the risk graph of the position as of the close Friday:
SPY July Iron Condor:
SPY closed Friday at 206.32; and the position is slightly under water by (-$14) as of the close. We will continue to let the position work as per the guidelines, which are outlined below.
Below is the SPY chart showing the short strikes:
SPY 6 month chart
The guidelines call for the position to remain open until target gain is reached, as long as SPY stays between the short strikes. They also call for exiting at the pre-set max loss, or if SPY reaches either short strike. It is recommended to have a "good to cancel" conditional order in to exit the position for target gain or max loss. Please follow your broker's specific guidelines on the setup of conditional orders as they can vary by broker.
Next week's economic news, highlighted by the BREXIT vote on Thursday, is summarized below:
10:00 am Janet Yellen speaking at semi-annual testimony before Senate Banking Committee
10:00 am Janet Yellen testimony continues
10:00 am Existing Home Sales
10:30 am EIA Petroleum Status Report
8:30 am Jobless Claims
9:45 am PMI Manufacturing Index
10:00 am New Home Sales
8:30 am Durable Goods Orders
10:00 am Consumer Sentiment
For those unfamiliar with the strategies we trade, the trade management guidelines for all the Couch Potato Trader plays were most recently published on August 20, 2015, 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,