Cabot Options Institute Quant Trader – Trade Alert (SPY Iron Condor)
S&P 500 ETF (SPY)
Well, we’ve seen five straight days of positive gains to the tune of 6%. While this may have helped all of our delta-positive poor man’s covered call positions in the Fundamentals service, the push higher wasn’t as kind to negative delta positions.
As a result, and as I spoke about yesterday in our update, I’m going to exit our November 17, 403/408 – 430/435 iron condor as it has hit our overall stop-loss. We brought in $1.87 worth of options premium which helps to offset some of the loss, but nonetheless, we remain disciplined in our risk management approach and honor our stop-losses. We know over time that a quantitative approach works, but we must never forget to employ strict risk management techniques to keep the law of large numbers working in our favor.
I plan on adding one, if not two, positions early next week to take advantage of the two upside gaps in SPY which has resulted in the short-term extreme overbought readings over various time frames.
The Trade
Simultaneously:
- Buy to Close SPY November 17, 2023, 430 call strike
- Sell to Close SPY November 17, 2023, 435 call strike
- Buy to Close SPY November 17, 2023, 408 put strike
- Sell to Close SPY November 17, 2023, 403 put strike … for a total of $3.50. (As always, the price of the spread can vary from the time of the alert, so please adjust accordingly.)
As always, if you have any questions, please feel free to email me at andy@cabotwealth.com.