Global markets swooned today; RUT never recovered to be within our recommended guidelines for the May position entry on Wednesday (less than a one-day standard deviation move). Tomorrow will bring another opportunity to enter if the market conditions are within our guidelines.

RUT closed today at 906.81, down over 16 points or a 1.87 standard deviation move.

RUT 6 month chart

Trade Entry Date: Thursday, April 18. Thursday is 29 days prior to May expiration; the last day I would recommend entering this monthly position. I recommend waiting until later in the day to enter, given the recent intra-day price movement. If the price of RUT moves +/- a one-day, one standard deviation, do not enter the trade until the movement is less than a one-day, one standard deviation. This is approximately 10 points as of today.

With the RUT closing today at 906.81, trade entry recommendations are in the same price ranges as the post last evening. To clarify it for everyone, I'll repeat the entry recommendations below:


Trade entry details are outlined below with 2 price ranges for entry as of the close today:



1) If the price of RUT is between 905 - 914.99 enter the following trade with the Iron Butterfly centered at 910:


Order Entry: SELL (1) IRON CONDOR.

SELL 1 contract May 910 CALL

BUY 1 contract May 960 CALL

SELL 1 contract May 910 PUT

BUY 1 contract May 860 PUT

CREDIT: At the close today, credit is $30.30. This most likely will not be the credit at the time of entry. Generally, credits for this position will vary depending on time of entry, volatility, price of the underlying, etc. Over the last several months, credits have ranged from $27.00 - $33.00.



Position Adjustment Trigger Points (if RUT moves +/- 10 points from center strike). Note: Try to wait 45 minutes - 1 hour after market opens before making any adjustments. Watch key levels of support or resistance before adjusting. If RUT is at, or hovering around, support and resistance levels, it may be prudent to wait a bit longer to adjust. Many times the first hour's price movement is not reliable. My personal preference is to wait until the end of the day whenever possible before adjusting.


- Upside adjustment if RUT reaches 920.

Roll Call spreads 20 points:

Order entry for adjustment: BUY (1) CONDOR using all CALLS.

BUY 1 contract May 910 CALL

SELL 1 contract May 960 CALL

SELL 1 contract May 930 CALL

BUY 1 contract May 980 CALL


- Downside adjustment if RUT reaches 900.

Roll Put spreads 20 points:

Order entry for adjustment: BUY (1) CONDOR using all PUTS.

BUY 1 contract May 910 PUT

SELL 1 contract May 860 PUT

SELL 1 contract May 890 PUT

BUY 1 contract May 840 PUT



2) If the price of RUT is between 915 - 924.99 enter the following trade with the Iron Butterfly centered at 920:


Order Entry: SELL (1) IRON CONDOR.

SELL 1 contract May 920 CALL

BUY 1 contract May 970 CALL

SELL 1 contract May 920 PUT

BUY 1 contract May 870 PUT

CREDIT: At the close today, credit is $29.20. This most likely will not be the credit at the time of entry. Generally, credits for this position will vary depending on time of entry, volatility, price of the underlying, etc. Over the last several months, credits have ranged from $27.00 - $33.00



Position Adjustment Trigger Points (if RUT moves +/- 10 points from center strike). Note: Try to wait 45 minutes - 1 hour after market opens before making any adjustments. Watch key levels of support or resistance before adjusting. If RUT is at, or hovering around, support and resistance levels, it may be prudent to wait a bit longer to adjust. Many times the first hour's price movement is not reliable. My personal preference is to wait until the end of the day whenever possible before adjusting.


- Upside adjustment if RUT reaches 930.

Roll Call spreads 20 points:

Order entry for adjustment: BUY (1) CONDOR using all CALLS.

BUY 1 contract May 920 CALL

SELL 1 contract May 970 CALL

SELL 1 contract May 940 CALL

BUY 1 contract May 990 CALL


- Downside adjustment if RUT reaches 910.

Roll Put spreads 20 points:

Order entry for adjustment: BUY (1) CONDOR using all PUTS.

BUY 1 contract May 920 PUT

SELL 1 contract May 870 PUT

SELL 1 contract May 900 PUT

BUY 1 contract May 850 PUT



Please note: My goal in the above guidelines is to give enough detailed instructions for trade entry within the 2 prices ranges I felt would be likely for RUT. Based on the close today (Wednesday), if RUT is outside of these two price ranges, it will have moved more than a one day, one standard deviation (10 points). Therefore, trade entry is not recommended.



TARGET GAIN AND MAX LOSS TRIGGER POINTS:

Target Gain: $250, which is 5% of maximum allocated margin ($5,000).

Maximum Loss: $500, which is 10% of maximum allocated margin ($5,000).

Your total "risk" in the position is the maximum allocated margin.

Trade is exited if either of these gain/loss conditions are met.


A trade update will be posted tomorrow.

Trade carefully,

Dot Hazlin