Churn, churn, churn. Is anyone's crystal ball giving clues on which way the market will break out of this consolidation? Mine is still showing a very cloudy picture.
The broad market closed lower Friday to end the trading week, following a payroll report that came out below forecasts, but still strong enough for the Fed to consider raising interest rates before the end of the year. The US added 156,000 jobs last month, and the unemployment rate crept up a bit to 5%.
The benchmark index SPX closed down -7.03 points, .3%, closing at 2153.74.
Below is the open position status:
SPX Weekly Iron Condor
This position was opened on Friday, October 7. Position details below:
SOLD SPX October 14 2190 Call, 1.00 credit.
BOUGHT SPX October 14 2200 Call, .40 debit.
SOLD SPX October 14 2105 Put, 2.70 credit.
BOUGHT SPX October 14 2095 Put, 1.90 debit.
Order was filled as an "Iron Condor" for $1.40 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: $860.
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 October 14 Iron Condor:
The position is showing a gain of $25 as of the close; the debit to exit is $1.15 according to Think or Swim. The position is flat delta going into next week. Our order remains in place to exit for target gain when the debit reaches $.80, or if the max loss reaches 10%. I do, however, recommend exiting the position regardless prior to the release of the FOMC minutes Wednesday afternoon. While there not likely to be any surprises, this news sometimes creates market volatility that could cause a move against the position with little time to recover.
Below is the SPX chart indicating the short strikes:
SPX 6 month chart
Next week's economic news, is summarized below:
9:00 pm US Presidential Debate
10:00 pm Fed Charles Evans speaks
2:00 pm FOMC Minutes
8:30 am Jobless Claims
8:30 am Import/Export Prices
11:00 am EIA Petroleum Status Report
12:15 pm Fed Patrick Harker speaks
8:30 am Producer Price Index
8:30 am Retail Sales
8:30 am Fed Eric Rosengren speaks
10:00 am Consumer Sentiment
12:30 pm Fed Chair Janet Yellen speaks
Next week is the planned entry window for the SPY Iron Condor for November. Monday will be 38 days prior to expiration, so we will look to enter sometime in the coming week depending on market conditions and available credit.
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,