Tuesday, May 21, 2013

Opening July SPX Iron Condor for non-directional option income portfolio

With 58 days to SPX expiration, it's time to get into a new option cycle. I tried to get $6.85 credit for the same IC yesterday but it was not filled as the market was falling in the later half of the trading hours. Today, market seemed to be rising slightly and the same order was filled in a couple of minutes at mid day.

I edited the chart a little bit so that it's easy to see the break-even levels, the option inventory and its Greeks, and the June probability in one chart as shown below. Again, I'll continue to build the positions in the next few days and the goal is to exit around June expiration time.
I gave the downside a little more room as usual among the conflicting market signals. This time, I think it's still possible to have a pullback for this extra falling room, even though the overbought market can also continue to be overbought for a while. The market has not shown the weakness that I'm looking for yet: distribution days in volume, churning of price actions, over-complacency as exhibited by lower VIX (VIX is not low when compared to the new high prices), etc.

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