The end of a volatile week as investors remained poised for the Fed meeting next week and what it may bring.
The broad market closed lower Friday as continued anxiety over next week's Fed meeting weighed in on investors.
Below is the open position status:
SPX Weekly Iron Condor
SOLD SPX September 23 2190 Call, 1.00 credit.
BOUGHT SPX September 2200 Call, .45 debit.
SOLD SPX September 23 2060 Put, 3.60 credit.
BOUGHT SPX September 23 2050, 2.80 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 $85.
Below is the risk graph as of the close Friday:
SPX September 23 Iron Condor:
SPX closed Friday at 2139.16, down 8.10 points or .38%. Despite the drop at the end of the week, the benchmark index did manage to squeak out a weekly gain of .5%. Our position is currently showing a gain of $35, the debit to exit is $1.00. Our orders remain in place to exit for target gain when the debit reaches $.75, or if the max loss reaches 10%. However, as I mentioned when the trade was opened, this position should be closed regardless before the Fed announcement on Wednesday. I will plan to exit no later than Tuesday afternoon, hopefully sooner if the market cooperates.
Below is the SPX chart indicating the short strikes:
SPX 6 month chart
SPY October Iron Condor
This monthly position was opened on Wednesday, September 14. Position details are below:
- SOLD SPY October 221 Call, .56 credit.
- BOUGHT SPY October 226 Call, .09 debit.
- SOLD SPY October 200 Put, 1.13 credit.
- BOUGHT SPY October 195 Put, .71 debit.
Order was filled as an "Iron Condor" for $.89 net credit (all four legs) .
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $413.
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 October Iron Condor:
SPY closed Friday at 213.52; our position is currently showing a gain of $20. Our order remains in place to exit when the debit reaches $.48 which would be target gain; or if the max loss reaches 15%.
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 is highlighted by the FOMC meeting, and is summarized below:
10:00 am Housing Market Index
FOMC Meeting Begins
8:30 am Housing Starts
No time announced; Bank of Japan Monetary Policy Announcement
10:30 am EIA Petroleum Status Report
2:00 pm FOMC Meeting Announcement
2:30 pm Fed Chair Janet Yellen Press Conference
8:30 am Jobless Claims
10:00 am Existing Home Sales
9:45 am PMI Manufacturing Index
Next week is the planned entry for the RUT October monthly Iron Butterfly. We will most likely wait until after the FOMC meeting announcement on Wednesday and hope there is sufficient credit later in the week.
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,