Condor Options

This is shaping up to be a nice week for market-neutral traders like us. Yesterday was one of the most boring days in a long time, and today looks like another modest flat/down day. There is no significant economic news coming today, Europe has nothing to report and Hong Kong markets are closed today. Housing troubles are contributing to a lack of positive sentiment – it’s interesting that without merger news, significant bond movement, or other economic stimuli, markets don’t seem to have anywhere to go.

This lack of major movement is extremely welcome after the huge swings we’ve seen over the past couple weeks. We still have over 4 weeks left before July expiration, and flat/down days like this are actually ideal for us.

Portfolio updates:

• Our IWM position is in great shape. With the index down $0.50 as I write, it is almost exactly in the middle of our range. Small caps have been consistently underperforming vs. large caps recently, so we have every reason to expect a good outcome for this trade.
• Our SPY position is also looking good. Again, on today’s further weakness we’re nearing the middle spot of our trade. For the SPY to violate our short strikes it will have to move over 2.3% in just a few weeks, which is certainly possible but increasingly unlikely.

We are considering taking another round of contracts to develop our positions further, and members will receive updates immediately as they are posted.