RUT May Iron Condor is nearing the downside adjustment trigger of 1250.
Today's selloff is bringing the May RUT position near the downside adjustment point of 1250.
A recap of the current position and suggested adjustment follows:
Original Position entered April 14
- SOLD RUT May 1260 Calls, 22.80.
- BOUGHT RUT May 1310 Calls, 2.90
- SOLD RUT May 1260 Puts, 21.55
- BOUGHT May 1210 Puts, 8.50
Order was filled as an "Iron Condor" for $32.95 net credit (all four legs).
Additional Order to Cut Negative Deltas on Upside:
- BOUGHT RUT May 1320 Call
Order for extra long call was filled for $2.10.
RUT reached the first upside adjustment the following day, and was adjusted as per the guidelines on April 15:
Upside Adjustment April 15:
BOUGHT RUT May 1260 Call, 28.90 debit.
SOLD RUT May 1310 Call, 4.50 credit.
SOLD RUT May 1280 Call, 16.40 credit.
BOUGHT May 1330 Call, 1.25 debit.
Net debit (all four legs): $9.25
The position is currently a 20 point wide Iron Condor, with short call strike at 1280, and the short put strike at the original 1260.
The current risk graph is shown below:
RUT May Iron Condor
The guidelines call for the threatened side to be rolled 20 points if it appears that RUT will close below 1250. This can be accomplished with one order: "BUY Condor"; in this case all Puts. The adjustment will be:
BUY RUT May 1260 Put.
SELL RUT May 1210 Put.
SELL RUT May 1240 Put.
BUY RUT May 1190 Put.
The adjusted position would put the short call strike at 1280, and the new short put strike at 1240, a 40 point wide Iron Condor.
It is recommended to adjust the position before the close today if it appears that RUT will close below 1250. Actual fill prices will be posted if the adjustment is executed.
As always, stay keen on your risk management and trade carefully,