Santa Claus, or the Fed, continues to lull investors in this Holiday week.
The market continues to drift higher, still hanging on the Fed's reassuring news from last week. Today will be the lightest volume day of the year, with markets closing early at 1 pm.
The adjusted January RUT position is holding it's own; RUT closed yesterday at 1202.43, barely unchanged from the day before. Below is the risk graph of the current position:
RUT January Iron Condor:
The position summary is as follows:
SOLD RUT January 1180 Call.
BOUGHT RUT January 1230 Call.
SOLD RUT January 1180 Put.
BOUGHT January 1130 Put.
Net Credit (all four legs): $35.15.
BOUGHT RUT January 1260 Call. Debit: $1.70
The trade guidelines call for the position to be adjusted with a 10 point move from the center strike in either direction. The position was adjusted Friday, December 19, with RUT trading at 1193.
Adjustment order details:
BUY RUT January 1180 Call.
SELL RUT January 1230 Call.
SELL RUT January 1200 Call.
BUY RUT January 1250 Call.
Net Debit (all four legs): $7.95.
The adjusted position now has the short call strike at 1200. The short put is at the original strike of 1180, so we now have a 20 point wide Iron Condor, along with the extra long call at 1260.
The position is currently +$50; target gain remains at $250. The position is slightly negative delta, but the T + 0 line is still fairly smooth to the upside since we have the extra long call. With the upper breakeven at 1225, I am not in a hurry to adjust this position again, especially in this shortened trading week. If RUT makes a new closing high above the all-time closing high of 1208 reached on July 8, we may consider making an adjustment depending on the position status and overall market conditions.
Trade updates will be posted as appropriate.
I also want to take this opportunity to wish each and all of you a very safe and Happy Holiday season! I appreciate your support of our newsletters and look forward to a successful 2015.
As always, stay keen on your risk management and trade carefully,