Here we go again; record high close. How high is it going?
The broad market ended the week at record-high levels once again, following a mixed bag of economic data. The benchmark index SPX closed up 11.33 points at 2459.27. This was a 0.5% increase and the first record close since June 19.
SPX 6 month chart
The CBOE's volatility or "fear" index, VIX, closed down 3.94% at 9.51, which represents the lowest level since 1993.
VIX 6 month chart
Below is the open position status:
We only have one position open this weekend; there was not enough premium at such low volatility levels for the SPX weekly Iron Condor. It is very difficult to recommend a decent trade entry when the VIX is under 11, and I felt it was better to keep cash as our position and hope for a better entry opportunity for the next weekly cycle.
SPY Monthly Iron Condor for August
This position was opened on Monday, July 10; details below:
- SOLD SPY August 248 Call, .52 credit.
- BOUGHT SPY August 253 Call, .08 debit.
- SOLD SPY August 233 Put, 1.00 credit.
- BOUGHT SPY August 228 Put, .63 debit.
Order was filled as an "Iron Condor" for $.81 net credit (all four legs) .
Margin/Risk is calculated by the width of the wings ($500), less credit received.
Margin/Risk for this trade: $419.
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 August Iron Condor:
Think or Swim is currently showing the position -$31.50. SPY closed Friday at 245.60, up .04 points. The short call strike at 248 is only three points away; so we need the market to pull back for the position to benefit. We will continue to monitor as per the guidelines.
Below is the SPY chart showing the short strikes:
SPY 6 month chart
Next week's economic news, is summarized below:
10:00 pm China GDP and Industrial Production
Monday, July 17
8:30 am Empire State Manufacturing Survey
8:30 am Import/Export Prices
10:00 am Housing Market Index
8:30 am Housing Starts
10:30 am EIA Petroleum Status Report
7:45 am ECB Rate Decision
8:30 am ECB Press Conference
8:30 am Jobless Claims
8:30 am Philadelphia Fed Business Outlook Survey
Next week is the planned entry window for the August RUT Iron Butterfly. Monday will be 31 days prior to expiration, so we will look to enter the position early next 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 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,