The drama in the White House continues, but the market appears to be brushing it off.
The broad market closed higher Friday, but did book a weekly loss after the selloff on Wednesday. The benchmark index SPX closed up +16.01 points or .68%, ending the week at 2381.73. Despite two days of gains, SPX posted a -.4% loss for the week.
Below is the open position status:
SPX Weekly Iron Condor
This position was opened Thursday, May 18; details below:
SOLD SPX May 26 2405 Call, 1.20 credit.
BOUGHT SPX May 26 2415 Call, .55 debit.
SOLD SPX May 26 2280 Put, 5.80 credit.
BOUGHT SPX May 26 2270 Put, 5.10 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 May 26 Iron Condor:
The position is currently +$25 as of the close; the debit to exit is $1.10 according to Think or Swim. The position is very short delta so should benefit from a pullback early next week.
Our order remains in place to exit for target gain when the debit reaches $.75, or if the max loss reaches 10%. However, I do recommend exiting the position regardless of the status prior to the FOMC minutes Wednesday afternoon. While there are no surprises expected, this news sometimes brings volatility that could go against the position with little time to recover.
Below is the SPX chart indicating the short strikes:
SPX 6 month chart
SPY Iron Condor for June
This monthly position was opened on Monday, May 8. Details below:
- SOLD SPY June 245 Call, .65 credit.
- BOUGHT SPY June 250 Call, .15 debit.
- SOLD SPY June 230 Put, .87 credit.
- BOUGHT SPY June 225 Put, .51 debit.
Order was filled as an "Iron Condor" for $.86 net credit (all four legs) .
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $414.
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 June Iron Condor:
Below is the SPY chart showing the short strikes:
SPY 6 month chart
SPY closed Friday at 238.31; this position is currently +$36 and fairly well centered.
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.
RUT Iron Butterfly for June
This position was opened on Tuesday, May 15. Details below:
- SOLD RUT June 1390 Call, 25.05 credit.
- BOUGHT RUT June 1440 Call, 5.80 debit.
- SOLD RUT June 1390 Put, 21.00 credit.
- BOUGHT RUT June 1340 Put, 7.50 debit.
Order was filled as an "Iron Condor" for $32.75 net credit (all four legs).
Additional Order to cut Deltas on upside:
BOUGHT RUT June 1480 Call
Order for extra long call was filled for $1.40.
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: $1,865.
Target Gain: 5% of the gross margin ($250/contract)
Max loss: 10% of the gross margin ($500/contract)
On May 17, just one day after entry, RUT gapped down and the position was adjusted to the downside as follows:
BOUGHT RUT June 1390 Put, 37.10 debit.
SOLD RUT June 1340 Put, 15.00 credit.
SOLD RUT June 1370 Put, 26.40 credit.
BOUGHT RUT June 1320 Put, 10.40 debit.
Net debit (all four legs): $6.10
The position summary after the adjustment is as follows:
SHORT June 1390 Call Call
LONG June 1440 Call
SHORT June 1370 Put
LONG June 1320 Put
LONG June 1480 Call bought at trade entry to cut position delta.
The position is now a 20 point wide Iron Condor.
The guidelines call for the second adjustment to be made if RUT reaches either short strike. However, since RUT is slightly below the new short put strike of 1370, we will let the position work a bit before acting too quickly. The new downside breakeven point is 1344 so there is a little room.
Below is the risk graph as of the close Friday:
RUT closed Friday at 1367.33, +6.25 points or .46%. The two days of gains has helped the position; it is currently +$168.
RUT June Iron Condor:
Next week's economic news, is summarized below:
10:00 am New Home Sales
10:00 am Existing Home Sales
10:30 am EIA Petroleum Status Report
2:00 pm FOMC Minutes
8:30 am International Trade in Goods
8:30 am Jobless Claims
8:30 am Durable Goods Orders
8:30 am GDP
For those unfamiliar with the strategies we trade, the trade management guidelines for all the Couch Potato Trader plays 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,