MW Spread Series
February 26, 2010
Trade: STO SPY Apr 10 100 (SWG100417P100) Puts / 101 (SWG100417P101) Puts / 118 (SPY100417C118) Calls / 119 (SPY100417C119) – Iron Condor.
Underlying: $111.00
Buying Power Reduction: $0.84
Trade Risk: $0.84
Trade Limit Price: $0.16
Trade Duration: Short Term
Trade Explanation: For the Spread Series we are selling to open the SPY Apr 10 100 / 101 / 118 / 119 strike iron condor for a credit limit of $0.16
There is a lot of positive and negative news in the US and the Global economy at the moment, firstly to the negative side – there are ongoing concerns in relation to the ability of Greece to pull itself out of debt. Shortly Greece will issue new 10 year bonds, as the Greek Government is hoping that they will sell, hence they are reassuring investors that Greece is still worth investing in. Within the US, unemplyment is still one of the number one topics, as there are more people unemployed in the US that there are total in Australia. As one can imagine, this is putting incredible strain on the Obama administration. On the positive side, even within these challenging economic conditions, companies are still making money, and some of them are making great money. Also, with the Fed raising the emergency discount rate (this is money that the US Government lends banks in need), while this could have an effect on profit, its an overall good sign, as the stimulus that the US government had provided through extremely low interest rates has to be slowly removed, therefore letting the economy stand on its own. These conditions typically will send the market into a choppy sideways trading range, hence making it great conditions to open an Iron Condor. We are opening this Iron Condor on the SPY’s, as while the premium is high, the SPY’s are very liquid, which is what we need if we are required to adjust.
We will be monitoring this position very closely to determine if we need to adjust or exit the trade depending upon market conditions and the price movement of the underlying.
MW Trade Team
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