RUT reached our upside adjustment trigger point and adjusted as per the guidelines.
At approximately 11:15 est. Friday morning, RUT touched on, and broke above, our upside adjustment trigger price of 910. As I mentioned in the trade entry recommendations, I usually try to wait until the end of the day to adjust, especially with a monthly trade. This always depends on the p/l of the position at the time it reaches the adjustment point, and how quickly the market is moving. Making adjustments is an integral element of non-directional trading. However, I am always cautious about adjusting prematurely and being caught in the classic "whipsaw".
Our position was hovering between breakeven and -$60 at the high of the day ($912.69), so I felt it was prudent to wait before making the adjustment until later in the day if RUT was still above 910. At 3:20 pm est with RUT at 910.70, the call spreads were rolled up 20 points. The adjustment order was:
BUY May 900 Call
SELL May 950 Call
SELL May 920 Call
BUY May 970 Call
The cost (debit) for the adjustment was $9.52.
Below is a graph of our current position:
RUT May Iron Butterfly after adjustment
The adjusted position is now:
The position is currently -$36.79, down less than 1% of the maximum allocated margin ($5,000).
Our next adjustment trigger points are:
UPSIDE at 920: Roll put spreads up 20 points for a credit:
BUY May 900 Put
SELL May 850 Put
SELL May 920 Put
BUY May 870 Put
DOWNSIDE at 900: Roll call spreads down 20 points for a credit. This is simply reversing the call roll done Friday, so the position returns to the original center strike at 900.
BUY May 920 Call
SELL May 970 Call
SELL May 900 Call
BUY May 850 Call
An update will be posted early next week.