With the upmove experienced in the broader markets on Friday, coupled with S&P futures moving 30 handles higher in low volume, U.S. market holiday conditions, look to sell on strength on Tuesday NY open via SPY, QQQ, IWM, and/or DIA short call credit spreads.
I have a wide variety of index ETF setups on at various expirations, but my primary focus will be on adding call side units in QQQ and SPY, where I put on March 18th short put credit spreads on the weakness experienced on the 11th and 12th.
With the short put sides, I've been legging into 3 or 4 strike-wide spreads with the short put at the 84% probability out-of-the-money strike; on the call side, I've been legging into similar width spreads with the short call at the edge of the expected move for the expiration, which is generally around the 75% probability out-of-the-money strike (due to vol skew on the call side).
Of course, I don't know exactly what the 75% prob OTM short call will be at NY open or how much additional movement S&P and/or Nasdaq futures will occur overnight. As of right now, it's looking like a comparatively calm Asian session: /ES is up 6 points, but oil appears to be somewhat frisky to the upside, catching a speculative bid on various OPEC/oil producing nation talk rumors, and gold is giving back some of its gains with a retreat back below 1200.
Comment
⋅
Filled SPY March 18th 198/201 short call vertical/credit spread for a .54 credit and a QQQ March 18th 106/109 for a .41 credit.
Yep. Keep in mind that selling that here is part of an existing setup. I'm basically legging into a full iron condor one side at a time -- the short put wing on weakness (last week); the short call wing on this strength. This trade will complete a full March 18th SPY iron condor and a full QQQ March 18th iron condor and, additionally, give me some short delta (I'm net long delta in SPY and QQQ as of Friday close). But if you're not currently in any index ETF positions here and want to leg into just the short call side on this strength, I would look for opportunities to sell short put verticals on weakness going forward to balance the negative delta of this short call credit spread ... .