New Trade Entry: RUT Monthly Iron Butterfly for the May Cycle. RUT settled within our entry guidelines today, so the new May position was entered.
RUT Position Entered Thursday, April 18. Below is a graph of the position shortly after entry.
RUT May Iron Butterfly at time of entry
May RUT Iron Butterfly centered at 900
Time of entry: 3:10 pm Eastern. RUT price: 899.05 at entry; RVX at 23.36
Call spreads: -900/+950
Put spreads: -900/+850
Credit received: $32.00
Maximum margin/risk is $5,000 (width of wings)
Buying power reduction: $1,800 ($5,000 less credit of $3,200). This leaves $3,200 (less commissions) for adjustments.
Adjustment trigger points:
- Upside if RUT reaches 910: Call spreads will be rolled up 20 points
- Downside if RUT reaches 890: Put spreads will be rolled down 20 points
Target gain: $250, or 5% of maximum allocated margin.
Trade will be exited if max loss of $500 is reached.
I will post an update as the trade progresses.
With regards to the SPX Weekly Iron Butterfly for April 4 cycle, I am still not recommending an entry this cycle. As I mentioned last night the last week has been quite volatile, and I feel the best risk management is to sit on the sidelines for this week and look forward to the next entry for the May 1 cycle. This is a great opportunity to paper trade, or continue to back test, the weekly trade until the next entry date.
As always, stay keen on your risk management and trade carefully.