Spike in premium should bode well for the SPX Short Iron Condor Strategy. Potential short-term bounce in the making.

The heavily anticipated short-term decline came today. Our measures are now oversold (SPY) to near oversold. Ideally, I would like to see an additional push lower before taking a position so until then, as always, I will wait patiently on the sidelines.  More specifically, I will be closely watching the lows established on 3/5, approximately 1374 in SPX, to see how the market reacts. I expect to see some choppiness around this area before a definitive move occurs.

The VIX is back up to 18.13 which should create a opportunity to collect some decent premium in our SPX Short Iron Condor strategy. This should also give us the opportunity to open up our range a bit as well which should always be an important consideration during volatile periods. Remember, we typically establish our SPX Short Iron Condor position the day following options expiration. So if you wish to receive our Iron Condor alert for this upcoming expiration cycle you would need to subscribe before the 18th of this month. Let us know if you have any questions.

 

Overbought/Oversold levels for March 13, 2007

• SPY - 29.7 (oversold)
• DIA - 30.3 (neutral)
• IWM - 32.6 (neutral)
• QQQQ - 32.2 (neutral)
• OIH - 47.4 (neutral)
• GLD - 34.1 (neutral)

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