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New Trade – SPX Iron Condor

As I described in my monthly report, I am slowly building my damaged account back up taking small trades and small income every week.

Last week, I opened a few trades against SPX – one bear call spread, and two Iron Condors. All expired worthless and I could keep all premium I received.

I will try to replicate such trades this week as well.

First, I need to assess what the market would do this week.

By looking at weekly and daily charts, I can see that on a weekly chart we are still bullish. But the daily chart tells a different story. The markets dropped the last few days. On Friday and today the markets tried to rally back.

Will this rally continue or is it just a return to the mean and we will see more selling coming?

Difficult question with even more difficult answer.

SPX

There are not too many events happening this week. We will see a FOMC meeting minutes on Wednesday and Jobless Claims on Thursday which may move the market either way (I would suspect up). I do not think that those moves will be that dramatic to breach my trade I put on today.

If so, I will move the leg of the trade or close it and sell a new one. Time will show.

Trade Detail

Today I entered the following trade (Iron Condor):

 

BTO 1 SPX Oct2 14 2020 call

STO 1 SPX Oct2 14 2015 call

STO 1 SPX Oct2 14 1920 put

BTO 1 SPX Oct2 14 1915 put

 
@ 0.45 LIMIT GTC
 

Typically, Iron Condor is a high probability trade, but its risk/reward is bad. With a high probability, it is OK to take such trade.

This trade will expire this Friday, October 10th, 2014. I collected a premium of $45.00 which translates into 9.78% gain if it expires worthless on Friday.

The max risk of this trade is $460.00 per contract and my margin requirement was $471.00 which will be blocked until Friday.

I believe, this trade will end up successful. I will hold it until expiration. Only if any leg of the Condor gets breached or endangered, I might roll it further away in time or roll it up by buying that leg and selling a new one. To do so, a sufficient cash reserves need to be sitting in a trader’s account (and that means mine too).

Let’s see how this trade ends up.

You can watch that trade on My Trades & Income page.

Happy Trading!
 
 





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