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Wow. Well Traders, this has been an Iron Condor's WET DREAM! I mean, I couldn't script this any better if I tried, except to have had my spreads at $1,825/$1,850 and $1,750/$1,725. At this pace, that would have made some serious Jack!Anyway, the $NDX took a nice tumble like I expected, though further and faster than I expected to close down -$25 points to end at $1,785.53. You'll notice the nice "Bearish Engulfing Pattern" which may indicate more downside. I would expect that based on the MACD and STO positions as well. The index has been recently rangebound between $1,820 and $1,750 with the exception of a small pop in mid-January. At this point everything looks golden and next week will be payday on Friday morning for February's contracts. Amen!On a down note, CyberTrader needs to get their shit together with Penson. I keep getting "Maintenance Call" emails for covered positions which is assanine. If they don't fix the problem ASAP, I'll be taking my business to Think or Swim.Have a GREAT Weekend and Happy Trading!
Well Traders, another fairly calm day when all was said and done. There is still a pretty good battle between the Bulls and Bears on the $NDX. Apple's big announcement bouyed the index (and the iPhone looks pretty darn sweet IMHO) as that stock soared over 8% to an all-time high today.
You can see the STO has just about peaked at this point. A downturn seems inevitable in the next day or three. The MACD hasn't "peaked" just yet...just a matter of time.
There is still plenty of time value in my Iron Condor, so there hasn't been much movement on the options just yet. That won't happen until we get past the January Options Expiration Day a week from Friday. Still, I am VERY happy with the way the $NDX is just waffling around here, not doing much one way or the other. I hope this duldrum continues for a few more weeks.
Happy Trading!
Well Traders, we are six (6) weeks until February's $NDX expiration date and I entered that month's Iron Condor today.
I placed my Bear Call at $1,900/$1,925 and my Bull Put at $1,625/$1,600 for a 275 point spread. That is pretty wide, so we'll see how it does over the following weeks. Why did I use these strikes? On the bottom, I liked the fact that there are three supports that can slow the index down. The first one is pretty major at the $1,761-$1,751, level which is highlighted in gray. The second is a lighter support at $1,695 and third is a very strong support at $1,630. I gave the Bull Put the extra $25 point buffer because when I entered the trade, the 30DMA was beginning to turn over and head downward, indicating a possible trend reversal. So I used that, plus the fact that folks panic sell, not panic buy as my reasoning.
On the top, basically it was a mathematical decision. In order to make the IC worthwhile in a risk/reward sense, the 125 point distance from the $NDX price (it was at $1,775 when I made the trade, and before the big run-up today) was the furthest point in which the trade still made sense.
I love the fact that the index has been somewhat neutral for the past few weeks, an Iron Condor dream...we'll see if it holds.
Here is my Analysis Sheet I created on EXCEL. You'll see, it has all the pertinent information on here in which to play the trade: the entry, the risk/reward, and rollover points. "Plan your trade, trade your plan." Now all I need, is for the $NDX to follow suit and maintain a neutral course and it will be another profitable trade.
Happy Trading!
Well Traders, I hope you had an enjoyable holiday this year. I did, capped off with a wonderful Rose Bowl victory for my beloved Alma mater, USC.
Since my last post on December 20, the $NDX has been in kind of a stalemate. The index has been sort of rangebound between $1,750 and $1,824. If you were a gambler, you could try an $1,850/$1875 Bear Call and an $1,725/$1,700 Bull Put for a pretty good risk/reward ratio, but I wouldn't. While the $NDX looks all warm and fuzzy in its new range, how much of this stagnation was due to two very long weekends with two major holidays? Right now I wouldn't put too much stock in it.
I should be getting into February's Iron Condor trade this Thursday, January 4, which will be six (6) weeks away from the February 15/16 Expiration date for the $NDX. Since the market is closed today, I'll start my risk/reward analysis tomorrow and post it for all to see.
Until then, R.I.P. President Ford (and your Michigan Wolverines!)
Well Traders, today was probably the last significant trading day of the year with many people beginning to start their holiday vacations. There will still be some trading, but my guess is that the volume will be light until the first week of January. Light volume can be a scary thing as less people can make pretty significant moves in the market, so be careful out there!
Today the $NDX fell another $7 points. More importantly, it tried to pierce the 30 Day Moving Average, but was unable to hold onto its advance keeping it below that resistance level for another day. Which begs the question, has the 30DMA now become a new level of resistance? Time will tell, but since it was such strong support for over 4 months, perhaps the roles are reversed? This will be important as we set up our next trade for February in a couple of weeks since I can't get the money I want to make a January trade worthwhile. Oh, I could move my Bear Call and Bull Put spreads closer to make up the money, but why risk it? Iron Condors are supposed to be very conservative, defensive plays since there is usually a poor risk/reward ratio. Now is not the time to be foolish and gamble.
We'll look at the next trade in the coming weeks, but in the meantime, I'll try to keep up with this blog every few days or so since I myself am going on vacation too.
Happy Holidays and Happy Trading!
Well Traders, looks like I may be in a bit of a quandry with my January Iron Condor. Today's big $20 point run-up was somewhat unexpected, though not totally. I suspected some breakout was close based on the Bollinger Bands squeezing. Couple that with a Bullish 30 day Moving Average and odds were, there would be a Bullish breakout possible. While it isn't a full-blown breakout, it did cause me to re-think my January play.
Here is the $NDX chart:
As you see, the diagonal resistance (formerly diagonal support on the Ascending Channel) is still holding. However, with the big run-up today, and the usual 4th quarter rally seemingly heating up again, I have decided to use the median line of the Ascending Channel designate my Bear Call spread at $1925/$1950. I have three resistances going for me at this time. The first is the aforementioned diagonal resistance line. The second is the previous high at $1824, which has only been tested once, so it isn't really strong resistance at this point. The third and final resistance is the Median line in the Ascending Channel, which does intersect the Expiration Date line at $1931 making it a little higher than the $1925 Short in my Bear Call. Call it a calculated risk.
For the Bull Put, things were a little easier. I chose a Bull Put at $1625/$1600. There are three supports protecting it: the first at $1761-$1750, a previous strong resistance (now considered strong support), the second support is at $1695, and third, there is very strong support at $1630 (trust me, you'll see it on a one-year chart).
I could have also gone Uber-conservative on the Bear Call by playing a $1975/$2000 spread, but there is no money in it. I could also choose a $1950/$1975 Bear Call, which would place it above the Median line intersect, but again, there is no money in it. The key is to find some balance of risk to reward that makes the trade worthwhile without being too risky. Remember, I have had to roll-out the last two months, and I'd like to get into plays where that isn't necessary. I hope this is my first one to accomplish that.
Tomorrow, I'll share the analysis sheet I created on EXCEL to show you the trade layout.
Happy Trading!
Wow. Well Traders, this has been an Iron Condor's WET DREAM! I mean, I couldn't script this any better if I tried, except to have had my spreads at $1,825/$1,850 and $1,750/$1,725. At this pace, that would have made some serious Jack!
