Depending on how you trade, this may or may not work for you. Personally, I may have played it a little differently.As you will see from my annotations, I have shown the two spreads on the graph shaded in gray. I have also noted the Expiration Date as well as the previous Friday (some folks get out a week before). According to the Ascending Channel I have drawn, I probably would have made my Bear Call spread further up based on the run-up estimated. As you can see, it looks like (and it is only an educated guess) the $SPX could get to $1460 by the Expiration Date. This would be the Short I would have entered, with my Long being $1465. Wayne chose to be more aggressive by playing a closer Bear Call spread.
Wayne's Bull Put spread on the bottom is close to what I would have placed. He chose a $1365/$1360 spread whereas based on support at $1360, I would have chose a $1360/$1355 spread. I am not saying what Wayne did was wrong...each trader plays these based on their own trading goals and risk tolerances. Wayne chose a much more aggressive (and higher paying) Iron Condor than I would. Let's see how he does and if his play works out for him! Good luck Wayne!!!
Happy Trading!
1 comment:
Thanks for posting my trade, and I appreciate all input and opinions.
I think I am cutting it close, but I based my numbers on the average of the last several months movement (which I placed at a range of 44 per month) and the 123.6 fib, which I placed at 1425. The closest higher strike of the two is 1445. I chose this because the SPX is respecting the fibs very well, coupled with the very slow trading week ahead and the resistance I believe the fibs will offer, placed me well within that range.
What makes this so fun and exciting is confirming with real dollars your skills as a chart reader and a bit of clairvoyance. But.. I ALWAYS welcome opinion. Nobody sees this the same, and someone will (undoubtedly) point out somehting I didn't consider, and should have. By the time we get your plan well underway, I hope the input from myself and others has helped create a reliable system that can be used as you envision it. I will try to do my part to help!
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