All systems go!

It's GO time Traders! Before I execute my trade tomorrow, I briefly wanted to go over a couple of charts of the $NDX so you can see where my thought process lies before December's trade.

Remember, we want the price of the $NDX to fall in-between our spreads by the third Thursday in December, that gives us maximum profits. So, the key to playing the strategy correctly, is to be where the market won't be. That means being a little dilligent, a little creative, and a little Miss Cleo (who couldn't see her own arrest coming ironically enough).

Let's look at the 1-year chart courtesy of INVESTools:


You can see the full size image by clicking on it (sometimes twice), then hitting your "back" button to return to the blog.

As you see, the $NDX has been on a tear since July. This is NOT the ideal condition for an Iron Condor, but really my spreads are so far apart that I should be able to handle even a strong trending market like this. The dream scenario is like November through April, that sweet range-bound flat channel. A market like that could allow you to play tighter spreads for more money and that may be a strategy to consider in the future...but not now. All I am looking for is the same spread each month being conservative, all the while looking at the BIG picture down the road.

Let's look at a closer picture since the channel began back in August:

So this is the set-up for December's trades. We recognize a very strong uptrending channel, two strong support and resistance levels, and our expiration date line. So now, at about 2 PM on Friday, I'll enter my trade based on the current $NDX price, then set my strike prices accordingly. After that, I'll update this chart showing my profit range, as well as my "danger zones," i.e., the exit points of this play based on time.

By the way, tomorrow may be very interesting in the $NDX since it looks like the index may be breaking out of its channel (and falling away from that strong resistance level).

Happy Trading!