Market Overview

Wait To Deploy Credit Spreads & Complete Iron Condors, Let This Rally Run


The market has found its mojo recently but it is too early to initiate call credit spreads. Our put spreads placed over the last few weeks are positioned perfectly but it is too early to sell credit spreads to create Iron Condors with the existing put spreads.

Earnings this week from tech giants like Intel, VMWare, Yahoo and Apple have provided the catalyst to propel the market back up to resistance. This is a pretty common occurrence, rallying the first couple weeks of earnings, and even more common for the Q2 earnings cycle.

A 14-15 handle VIX is extremely low and the resulting low options premiums make it not worth issuing low probability credit spreads until the market gets extended. Just like we wrote put spreads during the pullback to SPY 130's, we will wait until we see SPY 135 -137 before we deploy call spreads to complete Iron Condors.

One exception is the Q's. The Q's have been ripping this week and are approaching recent highs that will act as resistance. Today the Q's popped outside their upper Bollinger Band and the RSI is getting near overbought levels as well. There may be a call credit spread trade brewing............ Be patient and keep your powder dry.

Stay tuned and happy trading everyone.

Posted-In: call spread credit spread options tradingOptions Markets Press Releases


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