Market Overview

SPY Iron Condor, GOOG & AAPL Update, & SPY Wedge Forming


Today's SPY Iron Condor was an opportunity trade. An opportunity to potentially scalp a nice profit off the SPY became available this afternoon with today's tight market trading range. This morning's volatility juiced this week's options and we jumped on the opportunity.

Theta (time decay) took its toll on the position in the final 30 minutes of trading eroding the value of the calls by almost 50%. This benefits us as spread sellers in a big way as the spread value is now worth much less if we elected to close the position by buying back the calls to close. The difference between what we sold the calls for and what it would cost to buy them back is our profit.

This trade is anticipated to only last about 48 hours, expiring this coming Friday. Very defined support and resistance is evident in the market and the cross currents of positive economic data, geopolitical unrest, and rising commodities should be enough to continue the markets containment through the end of the week.

One item to note is the wedge pattern forming in the SPY. The wedge that is forming is coming to a very defined point and typically this chart pattern resolves with a large move one way or the other. It is too early for us to predict which way (up or down) the market will resolve this trading action. However, we are inclined to lean to an upside resolution.

The put side of our GOOG Iron Condor is requiring a lot of controlled breathing right now but the stock is reacting very well to support in the $590 area. The stock has been walking down the Bollinger Band and is very oversold short term. A bounce to relieve the oversold state is expected and if it occurs this week, no adjustment will be required. Rest assured, we are all over it and watching very closely. Thursday will be an important day.

Our adjusted AAPL call spread from last week is reacting well to the stock's weakness and is setting up nicely going into Friday expiration. Stay tuned and happy trading!

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Fill Report: SPY Iron Condor