The bulls continue their charge to record-high closings once again.
A slightly lower-than-expected GDP report failed to dampen the spirits of investors, and the broad markets closed in record territory yesterday. The benchmark index SPX gained 33.62 points to close at 2872.87, or 1.2%. The index closed the week up over 2%.
SPX 6 month chart
VIX 6 month chart
The VIX remained steady this week, and closed at 11.08, -4.32%.p>
Below is the open position status:
VXX Weekly Call Credit Spread for February 2 expiration
This position was opened on Thursday, January 25; details below:
SOLD VXX February 2 30.5 Call, .39 credit.
BOUGHT VXX February 34.5 Call, .14 debit.
Order was filled as a "Vertical" for $.25 net credit (all four legs).
Margin/Risk is calculated by the width of the wings ($400), less credit received.
Margin/Risk for this week's trade: $375.
- Target Gain: 3% of margin
- Max Loss: 6% of margin
Below is the risk graph as of the close yesterday:
VXX February 2 Call Credit Spread:
VXX closed yesterday at 27.64. The position is currently showing +$8.00, our orders remain in place to exit for a debit of $.13 which would be target gain, or for the max loss of 6%. Please note that if either of these orders trigger and execute Monday morning, the update will be posted in the afternoon. It is suggested that you have the conditional orders in place unless you are able to watch the market.
Below is the VXX chart showing the short strike:
VXX 6 month chart
RUT Iron Butterfly for February:
This position was opened on Tuesday, January 16; details below:
Order executed for this new position:
- SOLD RUT February 1590 Call, 22.95 credit.
- BOUGHT RUT February 1640 Call, 6.10 debit.
- SOLD RUT February 1590 Put, 24.30 credit.
- BOUGHT RUT February 1540 Put, 9.00 debit.
Order was filled as an "Iron Condor" for $32.15 net credit (all four legs).
Additional Order to cut Deltas on upside:
BOUGHT RUT February 1730 Call
Order for extra long call was filled for $.80
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 January 23, RUT reached the upper adjustment trigger and the position was adjusted as follows:
Adjustment January 23:
BOUGHT RUT February 1590 Call, 33.50 debit.
SOLD RUT February 1640 Call, 8.80 credit.
SOLD RUT February 1610 Call, 21.10 credit.
BOUGHT RUT February 1660 Call, 4.50 debit.
Net debit (all four legs): $8.10
The graph of the adjusted position is below:
RUT February Iron Condor after upside adjustment:
The position summary after the adjustment is as follows:
SHORT February 1610 Call
LONG February 1660 Call
SHORT February 1590 Put
LONG February 1540 Put
LONG February 1730 Call bought at trade entry to cut position delta.
The position is now a 20 point wide Iron Condor.
RUT closed yesterday at 1608.06, up 6.39 points and the position is fine so far. Think or Swim is showing the play is +$28, so we will let it continue to percolate.
The next adjustment trigger point will be either short strike, depending on overall position status and market conditions. The upper breakeven at expiration is now at 1633.51, so we will wait a bit beyond the short strike before making a second adjustment. This will, of course, depend on the overall market and position status.
Below is the risk graph as of the close Friday:
RUT February Iron Condor:
RUT closed Friday at 1597.63, with a major gain of 20.90 points or 1.33%. The position is currently $33, and we will continue to manage it according to the guidelines.
Next week's economic news is summarized below:
Monday, January 29
8:30 am Personal Income & Outlays
FOMC Meeting Begins
9:00 am S & P Case Shiller HPI
10:00 am Consumer Confidence
8:15 am ADP Employment Report
9:45 am Chicago PMI
10:00 am Pending Home Sales Index
10:30 am EIA Petroleum Status Report
2:00 pm FOMC Meeting Announcement
8:30 am Jobless Claims
8:30 am Productivity & Costs
9:45 am PMI Manufacturing Index
10:00 am ISM Manufacturing Index
10:00 am Construction Spending
8:30 am Employment Situation Report
10:00 am Consumer Sentiment
10:00 am Factory Orders
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,