📊 GE Trade of the Week: Our AI Sees an Industrial Breakout

Published Jun 26, 2026

How to Trade an Iron Condor on SPY: A Complete Walkthrough

Most options traders spend their careers trying to predict where the market is going. Iron condor traders do the opposite — they get paid when the market does nothing. It's one of the few strategies where doing nothing is the goal, which makes it especially attractive for semi-retired and retired traders looking for a structured way to put capital to work.

In over 25 years of trading and building tools for options traders — including my time as CTO at OptionsXpress — I've watched countless directional strategies fail simply because the market refused to cooperate. Iron condors flip that problem on its head. You don't need to be right about direction. You only need the market to stay reasonable. Time, decay, and a defined risk profile do the rest. The math tilts heavily in your favor: roughly 7 or 8 trades out of 10 hit their profit target when strikes are chosen well, and the defined-risk structure caps your downside on the rest.

The Setup

With SPY at $750 and a 45-day expiration, I'd structure the trade like this:

Buy 1 SPY $735 put ($0.85 paid)
Sell 1 SPY $740 put ($1.75 received)
Sell 1 SPY $760 call ($1.65 received)
Buy 1 SPY $765 call ($0.80 paid)

That's a net credit of $1.75 — $175 per condor — collected upfront. Max loss is capped at $325 (the $5 wing width minus the credit). The trade has four legs but only one identity: a short put spread below the market combined with a short call spread above it. You're selling premium on both sides while protecting yourself with the outer "wings."

Reading the P&L Diagram

The shape of an iron condor at expiration looks like a tent — or a trapezoid. Flat max-profit plateau in the middle ($740 to $760), sloped sides leading down through the break-evens at $738.25 and $761.75, and flat max-loss tails on both ends. If SPY closes between $740 and $760, I keep the full $175. If it closes anywhere between the break-evens, I'm still profitable. Outside that range, my loss is fully capped. Once you see the diagram, the strategy clicks. The shape is the strategy.

Strike Selection & Open Interest

The short strikes are the income legs. I target 0.16–0.25 delta on both — roughly one standard deviation from current price. That gives me approximately 80% probability of profit when structured correctly.

Open interest tells me where institutions are positioned. Heavy put OI clusters act as support (institutions buying puts as hedges); heavy call OI acts as resistance. I place my short put just above the heaviest put wall and my short call just below the heaviest call wall. Max pain — the strike with the highest combined OI — often acts as a magnet into expiration, so I center the trade around it when possible.

Liquidity Is Critical

Iron condors have four legs, which means every penny of bid/ask slippage costs you 4x. SPY's typical penny-wide spreads on weekly options make it ideal. I avoid lower-volume tickers entirely — the math simply doesn't work when you're giving away $0.05–$0.10 per leg on entry and another $0.05–$0.10 on exit. Verify open interest above 1,000 on every strike. Use limit orders, never market orders. Target the midpoint.

Management

Close at 50% of max credit. Exit by 21 DTE to avoid gamma risk near expiration. Never let losses exceed 2x the credit. If one side gets tested, consider rolling that wing down or out to collect more credit and reduce risk.

That's it. No prediction required. Just structure, patience, and discipline. At 10 contracts, that's $1,750 max profit per trade — a realistic monthly target for many traders. In practice, I enter a new iron condor every week or two, staggering expirations so I always have premium decaying somewhere.

That makes the current market a useful case study. SPY remains near record territory, but the tape is no longer one-way. Falling oil has helped ease some inflation pressure, while AI stock volatility, sticky inflation, tariffs, and Fed-rate uncertainty continue to create headline-driven swings. That is exactly the kind of environment where traders do not always need to chase direction. Sometimes the better question is not, “Where is the market going?” but “Can it stay inside a reasonable range?”

Recent Trade Review

In last Thursday’s Live Trading Room, we reviewed a long opportunity in $DRAM, the Roundhill Memory ETF, through our DPT service. The DPT model identified $DRAM as a potential long setup, giving traders a focused way to participate in the memory-chip and AI infrastructure theme while still using a model-driven framework for entry, risk management, and exit planning.

You can review the Live Trading Room recording here:
https://yellowtunnel.com/live-trading-room-recordings#live-trading-room-recordings

This is where the difference between free and paid services becomes important. Free market commentary can help traders understand the general landscape, but paid services provide timely SMS alerts when it is time to enter and when it is time to exit. In a fast-moving market, especially in a volatile area like semiconductors and AI-linked memory stocks, timing can make a major difference.

The goal is not just to find trade ideas, but to validate them through a disciplined process. Our models help identify opportunities, while expert analysis, macro conditions, sector trends, and risk-management tools help determine whether the setup is worth acting on. $DRAM was a good example of that process: a trade idea supported by both the model and the broader market theme, with defined risk and a clear plan.

Current Trading Landscape

Markets remain near all-time highs, but this week showed just how fragile leadership can become when the biggest winners start to wobble. SPY is still holding near record territory, and I remain in the market-bullish camp with the long-term trend intact. Over the next few months, I believe SPY can still rally toward the $760–$780 area, while short-term support sits closer to the $700–$720 range. That keeps the broader market setup constructive, but it also means investors need to stay disciplined. This is not a low-risk market. It is a bullish market that is becoming more selective.

The biggest driver of volatility this week was the sharp sell-off in technology, semiconductor, and AI-related stocks. After a powerful run, investors began taking profits in many of the same names that had carried the market higher. The pressure started in global chip stocks and quickly spread to U.S. AI leaders and infrastructure names. Nvidia, AMD, Intel, Alphabet, Amazon, and memory-related stocks all came under pressure as traders questioned whether valuations had moved too far, too fast. The concern was not that AI demand has disappeared. The concern was that the market may have priced in years of perfect execution, massive capex growth, and uninterrupted earnings expansion.

That weakness mattered because technology and AI have been the backbone of the rally. When the leaders stumble, the entire market feels it. The Nasdaq was hit hardest, while money rotated at times into small caps, defensives, cyclicals, and areas less tied to the AI-capex cycle. This looked less like a broad market panic and more like a leadership reset. After months of enthusiasm around AI, investors were forced to ask a harder question: which companies are actually monetizing the buildout, and which ones are simply being pulled higher by the theme?

Micron helped answer part of that question later in the week. Its strong earnings report and outlook reignited optimism around AI memory, storage, and infrastructure demand. The stock surged after results, and related names like SanDisk, Seagate, and other memory-linked stocks also benefited. This was important because it pushed back against the idea that the AI trade is finished. Demand for high-bandwidth memory, data storage, and AI infrastructure remains strong. However, the reaction also showed that the market is becoming more selective. Investors are still willing to reward companies with real earnings growth, pricing power, and direct exposure to AI demand, but they are becoming less willing to chase every AI-related story blindly.

Oil was the other major story this week, and it was a major positive for the broader market. Progress around U.S.-Iran negotiations, improved shipping traffic through the Strait of Hormuz, and expectations for better crude flow helped push oil prices sharply lower. WTI moved back toward the $70 area, giving investors relief after weeks of concern that higher energy prices could reignite inflation. Lower oil helps consumers, transportation companies, industrials, and rate-sensitive parts of the market. It also reduces pressure on the Fed by easing one of the biggest inflation risks from earlier in the month.

Still, geopolitical risk has not disappeared. The Middle East remains fragile, and the Strait of Hormuz is still one of the most important shipping channels in the world. Any renewed disruption could quickly send crude higher again and revive inflation concerns. For now, lower oil is a tailwind, but it should not be treated as a permanent solution. The market is pricing in de-escalation, and that means headlines still matter.

The Federal Reserve remains the biggest macro risk for equities. The Fed held rates steady in the 3.5%–3.75% range, but the message remained hawkish. Inflation is still above the Fed’s comfort zone, and the 10-year Treasury yield continues to trade in a volatile range between roughly 4.0% and 4.80%. That volatility in yields matters because higher-for-longer rates pressure valuations, especially in growth stocks and long-duration technology names. The market can handle elevated rates when earnings are accelerating, but it becomes much more sensitive when inflation, tariffs, oil prices, and valuation concerns all hit at the same time.

Economic data this week was mixed, but still broadly consistent with a resilient economy. CPI and PPI continued to show inflation pressure, import and export prices remained firm, and real average hourly earnings slipped slightly. At the same time, May PCE inflation came in close to expectations, which helped calm fears of an even hotter inflation surprise. GDP was revised higher, jobless claims remained relatively contained, and personal income and spending data continued to support the soft-landing argument. The economy is not breaking, but it is not giving the Fed a clean reason to turn dovish either.

That is the tension investors are dealing with right now. Growth remains strong enough to support earnings, but inflation remains sticky enough to keep the Fed cautious. AI demand remains real, but AI valuations are being tested. Oil has fallen, but geopolitical risk remains active. The labor market is still holding up, but unemployment indicators are beginning to tick higher. This is why I remain bullish, but selective. The long-term trend remains intact, but the market is no longer rewarding risk blindly.

Next week, investors will focus heavily on the June Nonfarm Payrolls report, scheduled for July 2. That report could shape expectations for the next Fed move, especially if wage growth or unemployment surprises the market. Fed speeches from Williams, Kashkari, and Barkin will also be important as investors look for clues on whether policymakers are leaning toward holding rates steady or preparing the market for additional tightening. The Dallas Fed Manufacturing Index, Treasury bill auctions, and global policy commentary from the Bank of England will also help shape the macro backdrop.

Earnings will remain important as well, especially from companies tied to consumer demand, pricing power, and margins. Walgreens Boots Alliance, Constellation Brands, Levi Strauss, McCormick, ConAgra Brands, General Mills, and Paychex will give investors a better read on spending, labor costs, input costs, and corporate guidance. After Micron’s report helped stabilize the AI trade, the next question is whether earnings outside of semiconductors can continue to support the broader market.

For now, the message is clear: the bull trend remains alive, but leadership is narrowing and discipline matters. Lower oil, resilient growth, and real AI demand continue to support the market. But higher-for-longer interest rates, sticky inflation, tariff uncertainty, geopolitical risk, and early signs of labor-market softening remain the key risks. This is a market where investors should stay involved, but not complacent. Model-driven trade selection, risk management, and patience remain the best tools for navigating the next move.

(Last Chance): Father's Day Lifetime Access Closes Tonight

Happy Father's Day!

A moment of gratitude — for the fathers, grandfathers, and father figures who shaped how we think about money, work, and decision-making.

And then — the final reminder I'll send.

The Lifetime Special closes tonight at midnight.

[CLAIM YOUR SPOT BEFORE IT'S GONE→]
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Sector Spotlight: Industrials ($XLI)

This week’s Sector Spotlight is Industrials, represented by $XLI. While technology and AI-related stocks dominated the headlines for most of the week, the volatility in semiconductors also reminded investors why sector diversification matters. The AI trade is still powerful, but after a sharp run, investors are becoming more selective. That creates an opportunity for areas of the market that can benefit from resilient economic growth without being as crowded as megacap technology.

Industrials fit that profile. The sector has exposure to aerospace, defense, machinery, transportation, logistics, electrical equipment, and infrastructure. These are areas that can continue to perform if the economy remains resilient, corporate spending holds up, and the market broadens beyond just AI and semiconductors. This week’s economic data supported that view. GDP was revised higher, the labor market remains relatively stable, and lower oil prices helped ease some pressure on inflation and transportation costs. That combination is constructive for industrial companies.

The drop in oil prices is especially important. Lower crude helps airlines, transportation companies, manufacturers, and logistics businesses by reducing input and fuel cost pressure. It also helps reduce the risk of another energy-driven inflation spike, which can support broader market confidence. For industrials, that is a meaningful tailwind.

At the same time, the sector is not immune to risk. Higher-for-longer interest rates remain a challenge, especially with the 10-year Treasury yield still trading in a volatile range between roughly 4.0% and 4.80%. Tariffs, labor costs, and global demand uncertainty also remain important risks. But compared with the frothier parts of the AI trade, industrials offer a more balanced setup: economic resilience, infrastructure demand, defense spending, aerospace recovery, and relative strength during periods when investors rotate away from crowded technology names.

That is why $XLI stands out here. The market remains bullish, but selective. I still believe SPY can work toward the $760–$780 range over the next few months, with short-term support closer to $700–$720. In that environment, I want exposure to sectors that can participate in the rally while also offering more durable, real-economy support. Industrials give us that balance.

Trade of the Week: Buy $GE

This week’s Trade of the Week is $GE, GE Aerospace. GE is one of the strongest names within the industrial sector and remains well positioned in the current trading landscape. While the market has been digesting AI volatility and semiconductor profit-taking, GE offers exposure to a different but highly durable growth theme: aerospace demand, engine services, defense, and long-cycle industrial backlog.

GE Aerospace continues to benefit from strong commercial aviation demand. Airlines still need engines, parts, maintenance, and service support, and GE’s business model is heavily tied to long-term engine service revenue. That is important because service revenue can be more durable than one-time equipment sales. As flight activity remains strong and airlines continue investing in fleet reliability, GE remains well positioned.

The macro backdrop also supports the setup. Lower oil prices help airlines by reducing fuel pressure, which can support travel activity, margins, and aircraft utilization. A resilient economy supports business and consumer travel demand. Defense spending remains a stabilizing force. And in a market where investors are becoming more cautious about high-valuation AI stocks, GE offers a cleaner industrial growth story with strong fundamentals and less direct exposure to semiconductor volatility.

Our AI forecast also aligns with the bullish setup in GE. The model supports the idea that GE remains a favorable long opportunity, and that confirmation matters. We are not simply buying a strong story; we are looking for alignment between the technical setup, the macro backdrop, sector strength, and model-driven signals. When those pieces line up, the trade becomes more attractive.

The key risks are still worth respecting. If interest rates rise sharply, if the labor market weakens, or if global growth slows, industrial stocks could come under pressure. GE has also had a strong move, so traders should avoid chasing blindly and use disciplined entry levels, position sizing, and risk controls.

Still, the broader thesis remains constructive. Industrials are gaining attention as investors look beyond crowded AI trades, $XLI offers a strong sector backdrop, and GE Aerospace stands out as one of the best-positioned names in the group. With strong demand, a durable services business, aerospace and defense exposure, and AI forecast confirmation, $GE is our Trade of the Week.

This week, I am adding GE Aerospace (GE) to my portfolio.

And one more thing! Our track record speaks for itself from the standpoint of a Winning Trades Percentage, Average Return Per Trade, and Net Gain. Just take a look:

The consistent performance of our services is just incredible. My historical stellar performance is made possible by being right on 82.21% of all trades that I made, with an average profit of 39.52% per trade on our collective trade recommendations. To my knowledge, this trading performance is one-of-a-kind and stands alone in the marketplace for superior trading advice, where our numbers and results speak for themselves.

For the rest of 2026, the market is entering a more selective and demanding phase. On the surface, major indexes remain resilient, but underneath, investors are navigating a more complicated environment shaped by geopolitical tensions, tariff uncertainty, uneven megacap earnings, sticky inflation expectations, and renewed pressure from interest rates. At the same time, labor market data is beginning to soften at the edges, creating a setup where discipline, timing, and data-driven decision-making are becoming more important than broad market optimism.

This is exactly where YellowTunnel becomes essential.

In a market where leadership is narrowing and volatility can return quickly, investors need more than headlines and guesswork. YellowTunnel’s AI-powered tools are designed to help you cut through the noise, identify high-probability setups, track changing market conditions, and stay aligned with the strongest pockets of opportunity. Whether you are looking for real-time trade ideas, advanced stock and options analysis, predictive market data, or a more disciplined trading process, YellowTunnel gives you the structure and clarity needed to act with confidence.

As conditions tighten heading into Q3, the difference between reacting emotionally and following a proven, data-backed approach can be significant. Our goal is to help you stay prepared, stay selective, and stay focused on the opportunities with the strongest risk-reward potential.

Whether you are focused on short-term trades, portfolio positioning, options strategies, or improving your overall trading mindset, YellowTunnel provides the tools, insights, and guidance to help you navigate this market with greater precision.

Let’s work together to make the rest of 2026 a stronger, smarter, and more disciplined period for your portfolio. As always, successful investing begins with informed decisions, proper risk management, and a clear understanding of your personal goals and risk tolerance before entering any trade.

One more thing, I've had the opportunity to take additional action with a great organization supporting families in Ukraine directly. Gate.org is a foundation where fundraising is held for specific families, allocating funds to multiple families currently living in Ukraine. I am on the board of directors for this great initiative and encourage everyone to check it out and donate if possible. The war in Ukraine is escalating, and families are being negatively impacted and displaced daily. To learn more about this initiative to help families, please see the link below:

www.gate.org

Wishing you a week filled with resilience, growth, and prosperous opportunities!