It may be necessary to adjust the RUT February Iron Condor to the downside, OR exit the trade and move on.

As mentioned in my weekend update, the guidelines for the February RUT Iron Condor call for an adjustment if RUT drops 10 points from the original position center, which is 1170. If it appears that RUT will close below 1160, it is a trader's choice whether to adjust this position for the third time, or exit the trade and move on. A summary of the position is as follows:

Original Position:

SOLD RUT February 1170 Call.

BOUGHT RUT February 1220 Call.

SOLD RUT February 1170 Put.

BOUGHT February 1120 Put.

Net Credit (all four legs): 36.50

BOUGHT February 1270 call (to cut deltas): $.90 Debit

Adjustment #1 to Upside January 22:

BOUGHT RUT February 1170 Call.

SOLD RUT February 1220 Call.

SOLD RUT February 1190 Call.

BOUGHT RUT February 1240 Call.

Net Debit (all four legs): $7.40

Adjustment #2 to Upside January 26:

BOUGHT RUT February 1190 Call.

SOLD RUT February 1240 Call.

SOLD RUT February 1210 Call.

BOUGHT RUT February 1260 Call.

Net Debit (all four legs): 8.25

The position is now a 40 point wide Iron Condor, with the short call strikes at 1210, and the short puts at the original strike of 1170.

The guidelines call for the threatened side to be rolled 20 points if RUT closes below 1160. This can be accomplished with one order: "BUY Condor"; in this case all Puts The adjustment would be:

Downside Adjustment

BUY RUT February 1170 Put.

SELL RUT February 1120 Put.

SELL RUT February 1150 Put.

BUY RUT February 1100 Put.

The adjusted position would have the short put strike at 1150, and the short call at 1210 creating a 60 point wide Iron Condor.

The current debit to adjust the position is 4.75. For those planning to adjust, It is recommended to adjust if it appears RUT will close below 1160.


Please note: Rather than adjust this position for the third time, I have closed my live position for a loss of ($150), but will follow through with the adjustment as a paper trade for educational purposes.

As always, stay keen on your risk management and trade carefully,

Dot Hazlin