Easy Stock Options Strategies – Bullish Iron Condor Using ETF SPY

In my opinion it the S&P 500 is due for a little upside action. Once again I use one of my favorite option strategies, the iron condor. When you sell an iron condor, you are selling a put spread and a call spread at the same time. There are more than a few ways to trade the S&P 500, but my favorite way is to trade the SPDR S&P 500 ETF which trades on the New York Stock Exchange under the symbol SPY.

stock options strategies

A lot of times when I sell an iron condor, I am direction neutral, and will place the short strikes an equal distance from the current underlying price. Right now have a bullish opinion on SPY, so I set my put side up a little closer to the current price of SPY. This increases my premium, but also increases my risk to the downside. I also set my call side a little further away than I would normally.

I sold the 232/236 put spread and the 268 / 272 call spread for February 15th, 2019 expiration, which is 42 days away. I collected $108 as my premium. This iron condor is skewed to the upside, I am looking for a little of a bounce here. Below you can see a screen shot from my tastyworks account. If you are interested in learning about how to trade stock options, I recommend you check them out. In my opinion, they are the best brokerage for stock options.

stock options strategies

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SPY ETF Technical Analysis

I always like to use stock chart technical analysis in my post, and as usual, I use the Bollinger Bands, Fibonacci Pivot Points, RSI, MACD, and Stochastic. I wouldn’t consider myself a technical trader, but I am a visual trader.

The first thing I do before I enter into a trade, I check FINVIZ, I like to see if there are any upcoming earnings reports, or dividends. FINVIZ is a great resource for all of that.

The Bollinger Bands show that SPY is approaching the 20-day moving average. It has bounced off of the lower band, but is still inside of it. Some traders would consider this to be a bearish sign for SPY, but I think it is just oversold here, so I’m contradicting what my eyes are telling me.

stock technical analysis

Below you can see the Fibonacci pivot points for SPY. Looks like SPY is approaching the pivot point of 254.15. If it can cross above that, the next resistance, R1, is 271.34. To the downside, SPY has support at S1 at 236.96, which is right about where the short put for this trade is.

stock technical anaylysis

The RSI for SPY is currently at 46.42, and is pointed upward. Not really oversold or overbought, just kind of in the middle.

stock technical analysis

Here are two bullish signals for SPY, and this is really what made me decide to have a bullish skew. The first one is the MACD, which you can see below shows a bullish crossover.

 

 

 

 

 

 

 

stock technical analysis

The second bullish signal for SPY comes from the stochastic. Below you can see that it is also showing a bullish crossover. If you look back around December 24th 2018, we also see a bullish crossover from the stochastic. I feel like when it does that, meaning two quick bullish crossovers, the second one sticks.

stock technical analysis

Some of you may remember my post last month, where I had a similar strategy using the same underlying SPY. I trade the SPY pretty much every month. It is the most liquid underlying that I know of, and that is ultimately most important to me. When things go the wrong way (and they sometimes do) you want liquidity so you can get out at a fair price.

That’s all I have for now, if you have any questions, please leave them below.

 


8 Replies to “Easy Stock Options Strategies – Bullish Iron Condor Using ETF SPY”

  1. aaronspilcher

    Hey James!

     I have been for, lack of a better term playing around, In buying stocks by using the stock apps Stash and also Robinhood to obtain I would say a very diverse portfolio of investments.

    I’ve invested in products such as pandora, and Disney but I haven’t noticed any increase, matter of fact I have only noticed my stocks decrease. 

    I am interested in becoming successful at stock trading and I found the information in your article very informative but I was curious if you had any other article for people who are absolute rookies and looking to learn fast!

    Thank you again James, it is very clear you are knowledgable on the topic!

    I look forward to hearing back from you soon,

    Aaron

  2. Henry

    Hi! Thank you very much for sharing your strategy. I have obtained good results coping what you mention on your site. My next move is to emulate what you’re doing with SPDR S&P 500 ETF. I love the fact that there is always chance to get out at a fair price if things eventually go wrong. 🙂

    I’m also very visual, and I greatly appreciate each time you include Bollinger Bands and Fibonacci Pivot Points. My favorite is the Bollinger Bands.

    Have a great day!

  3. Courtney

    I have just started to grow an interest in the stock market while actually in the market for a new home. In my particular area housing has been overpriced and now beginning to slow. I asked my realtor what he predicted to happen this coming year. He said people are expected a slight recession, what is your option on this and how would that change your advice for someone just getting into the stock market?

    • James

      Well, it sounds as i your realtor is saying that there will be less business, aka short.  There is an ETF, IYR, that is tied to the real estate market.

      One way you could play this, if that is what you believe also, would be to sell a call spread, which is basically just the call part of the iron condor that I described above.  You would be expecting the price of IYR to go down, thus making your short calls, worthless.  (Which is what you want)

      • jhon jones

        that seems incredibly complicated and riskier advice for a beginner, if you want to short real estate just buy into SRS ETF shares.

        • James

          Hi Jhon, thanks for the comment.
          I get that it may seem complicated, but it really isn’t. Using options allows investors to maximize their returns while preserving capital. Let me try to explain.

          Lets say you have $2,000 that you can invest and we will use your SRS ETF, currently at $30.84
          So you can only buy 64 shares. (2000 / 30.84)

          If SRS goes to 35, you will make 266 profit. You risked 2000, made 266.24

          If you however would sell a put spread, you could make the same amount, but with a lot less risk. A 29 / 33 put spread could be sold for $235 right now, and you would only be risking $165, allowing you to use your 2,000 in other investments.

  4. Jamiro Hazel

    I really enjoyed the structure of this article. I am not really familiar with the stockmarket, so I don’t really know what to do. By this article I can see that clearly you know what you are doing. So I was wondering if you could share the source of yoour information? Is there a way you can give more insight on the matter? 

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