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Today we are applying an Iron Condor on the XJO

Analysis:

The XJO has been tracking sideward for a few weeks now, unwilling to move too far from the key level of 7,500. 7,500 remains a sticking point for our market despite either positive or negative swings overseas, or news that would also typically see us higher or lower.

We suggested to our clients today an Iron Condor with a 16th of September expiry (next Thursday). The two sold legs were at 7,625 (all-time high) and 7,400 (major support). We are expecting the XJO to track sideward between those two key levels over the next week or so. There isn’t much in the way of news to next Thursday except for a U.S inflation reading on the 14th (next Tuesday). This will add to the narrative around interest rates and tapering but this area has been developing and evolving for the past while, including the few weeks we have been tracking sideward. It seems we are simply ignoring it for now, or it is working in conjunction with other factors to keep our market level.

Provided the XJO remains between the two sold legs of 7,625 and 7,400 by the 16th of September, not only do our clients make maximum profit, they also don’t have to pay exit costs. This is a great strategy for a sideward market where often it can be hard to find directional trades.