The rally continues full steam ahead across the broad market.

Major indices charged ahead once again on Friday, posting weekly gains for the fourth week in a row. The benchmark index SPX closed at another record high, at 2175.03, +.44%. The closing broke Wednesday's record high close of 2173.02. Below is the open position status:

SPX July 29 Weekly Iron Condor

This position was opened Friday, July 22, as follows:

SOLD SPX July 29 2195 Call, 1.45 credit.

BOUGHT SPX July 29 2205 Call, .70 debit.

SOLD SPX July 29 2115 Put, 2.10 credit.

BOUGHT SPX July 29 2105 Put,1.55 debit.

Order was filled as an "Iron Condor" for $1.30 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: $870.

Target Gain: 7% of margin/risk or $60.

Max loss: 10% of margin/risk or $85.

Below is the risk graph as of the close Friday:

SPX July 29 Iron Condor:

The position is at breakeven as of the close; quite negative delta so should benefit from a pullback early next week. Our exit order remains in place to close the position for a debit of $.70 which would be target gain, or for the pre-set max loss of 10% (if the debit to close reaches $2.15). It is recommended to exit the position before the FOMC meeting announcement which is Wednesday afternoon. There is usually volatility associated with this news, and a sudden move against the position would leave little time to recover.

Below is the 6 month chart showing the short strikes:

SPX 6 month chart

RUT August Monthly Iron Butterfly

This position was opened on Monday, July 18. Position details below:

- SOLD RUT August 1210 Call, 20.90 credit.

- BOUGHT RUT August 1260 Call, 3.30 debit.

- SOLD RUT August 1210 Put, 21.00 credit.

- BOUGHT RUT August 1160 Put, 7.70 debit.

Order was filled as an "Iron Condor" for $30.90 net credit (all four legs).

Additional Order to cut Deltas on upside:

BOUGHT RUT August 1290 Call

Order for extra long call was filled for $1.00.

Margin/Risk is calculated by the width of the wings ($5,000), less credit received, plus the cost of the extra long call.

Margin for this trade at entry: $2,010.

Target Gain: 5% of the gross margin ($250/contract)

Max loss: 10% of the gross margin ($500/contract)

Below is the risk graph as of the close Friday:

RUT August Iron Butterfly:

The position is currently +$141, fairly well centered, so we will let it work as per the guidelines.

Below is the 6 month RUT chart showing that this rally may have some legs to it.

RUT 6 month chart:

The adjustment trigger points for this position are if RUT moves up or down 10 points from the center of the Iron Butterfly. Adjustment trigger on the call side would be if RUT reaches 1220. Since we have the extra long call, we can be a little patient with the adjustment depending on the position status and overall market conditions. The downside adjustment would be at approximately 1200, depending on market conditions and position status at the time the trigger is reached. As the trade is also a bit more "friendly" on downside moves, we can be patient as well on making the downside adjustment if the trigger is reached. Remember these are guidelines, not concrete rules, and can be modified as a trader chooses depending on market opinion.

Next week's economic news is summarized below:


FOMC Meeting Begins

9:00 am S & P Case Shiller HPI

10:00 am Consumer Confidence

10:00 am New Home Sales


8:30 am Durable Goods Orders

10:00 am Pending Home Sales

10:30 am EIA Petroleum Status Report

2:00 pm FOMC Meeting Announcement


8:30 am International Trade-in Goods

8:30 am Jobless Claims


8:30 am GDP

9:45 am Chicago PMI

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,

Dot Hazlin