By Darrell Martin
This week, on Friday, June 19, 2015 at 8:30 AM ET, Statistics Canada will release four reports regarding pricing and sales that affect the economy.
CPI - Consumer Price Index
Core CPI
Retail Sales
Core Retail Sales
The Consumer Price Index is the percentage change in the price of goods and services purchased by consumers and the Core CPI excludes the eight most volatile items. Since volatile items make up a quarter of the CPI they can distort the percentage. Because of this, reports are released both with and without the volatile influencing items. Retail Sales is similar, in that Core Retail Sales excludes automobiles from the change in the total retail sales numbers. All four reports coming out together means time for an Iron Condor using Nadex Spreads to fly the coop.
Let Your Condor Fly at 8:00 AM ET
To let your Condor strategy fly, look to enter your trade at 8:00 AM ET for a 10:00 AM ET expiration. Using North American Derivatives Exchange (Nadex) Spreads, buy a lower USD/CAD spread and sell an upper USD/CAD spread. The ceiling of the lower and floor of the upper should meet and be where the then current underlying USD/CAD market is trading. For this Iron Condor, you want a profit potential of $30 or more. To have that setup, just buy the lower spread for around $15 or more and sell the upper spread for around $15 or more. To see an actual example and learn the ins and outs of an Iron Condor trade, read The Awesomeness Of An Iron Condor.
Benefits Of A Wide Wing Span
There are many awesome benefits of an Iron Condor including low risk and the ability to capture profit regardless of the direction the market moves. The actual bird itself has a wide wingspan, and like the bird, so does the strategy. It allows for price to move a great deal and still be within a 1:1 risk reward ratio. For example, with this trade recommendation the market can move up or down 60 pips, maintain around that price until expiration and still have a 1:1 risk reward ratio. For maximum profit potential, after the market moves it needs to pull back to the center between the two spreads. For each pip away from the center it is at expiration, that is $1 off of max profit. After having analyzed 12 - 24 market reactions to these reports being released, it was found that the market consistently made a move and pulled back. This made an Iron Condor a high probability strategy for this news event.
Nadex is a Designated Contract Market and Derivatives Clearing Organization, regulated by the Commodity Futures Trading Commission (CFTC) and offers Spreads and Binaries for trade from over 49 countries. To improve your trading education and for a full news calendar with strategies, go to www.apexinvesting.com.