It may be necessary to adjust RUT December Iron Butterfly again.
Yesterday RUT reached the initial upside adjustment trigger of 1180, and the position was adjusted as per the guidelines. Thanksgiving week is normally bullish, and as of this writing it appears that trend is continuing this year. RUT closed yesterday at 1186.94, less than 4 points from the next adjustment point of 1190. Futures are up just slightly this morning. The release of the GDP at 8:30 eastern could trigger a continued bullish move which may take RUT to the next adjustment trigger of 1190.
It is recommended to adjust before the end of the day today if it appears that RUT will close at or above 1190..
A recap of the original position and recommended adjustment is below:
SOLD RUT December 1170 Call.
BOUGHT RUT December 1220 Call.
SOLD RUT December 1170 Put.
BOUGHT October 1120 Put.
Net Credit (all four legs): $30.67
BOUGHT Extra Long Call/December 1250: $.75
Call spreads rolled up 20 points yesterday:
BOUGHT RUT December 1170 Call.
SOLD RUT December 1220 Call.
SOLD RUT December 1190 Call.
BOUGHT December 1240 Call.
Net Debit (all four legs): $8.88
The adjusted position as of the close yesterday is shown below:
RUT December adjusted Iron Butterfly:
The guidelines call for the threatened side to be rolled 20 points if RUT moves above 1190. This can be accomplished with one order: "BUY Condor"; in this case all Calls once again. The adjustment will be:
BUY RUT December 1190 Call.
SELL RUT December 1240 Call.
SELL RUT December 1210 Call.
BUY RUT December 1260 Call.
The adjusted position will now put the short call strike at 1210, and the short put at the original strike of 1170, creating a 40 point wide Iron Condor.
The current debit to adjust the position is $7.48, but that will change during the day. As always, it is recommended to wait at least the first hour before adjusting; but it is recommended to adjust before the end of the day today if RUT is at 1190 or higher. The exact time of the adjustment is a trader's choice depending on your trading schedule and market opinion. Actual fill price for the adjustment will be posted if the adjustment is made.
As always, stay keen on your risk management and trade carefully,