June RUT Iron Butterfly order filled.
Order executed for this new position:
- SOLD RUT June 1250 Call, 17.50 credit.
- BOUGHT RUT June 1300 Call, 1.65 debit.
- SOLD RUT June 1250 Put, 24.12 credit.
- BOUGHT June 1200 Put, 8.50 debit.
Order was filled as an "Iron Condor" for $31.47 net credit (all four legs). RUT was trading at approximately 1248.50 when the order filled.
Additional Order to cut Deltas on upside:
BOUGHT RUT June 1310 Call
Order for extra long call was filled for $1.25.
Margin/Risk is calculated by the width of the wings ($5,000), less credit received, plus the cost of the extra long call.
Margin/Risk for this trade: $1,978.
Target Gain: 5% of the gross margin ($250/contract)
Max loss: 10% of the gross margin ($500/contract)
Below is the risk graph of this week's position as shown on my broker's platform:
RUT June Iron Butterfly:
The adjustment trigger points for this position are if RUT moves up or down 10 points from the center of the Iron Butterfly. Adjustment trigger on the call side would be if RUT reaches 1260. Since we have the extra long call and the position was entered when RUT was at 1248, we can be a little patient with the adjustment depending on the position status and overall market conditions. The downside adjustment would be at approximately 1240, depending on market conditions and position status at the time the trigger is reached. Remember these are guidelines, not concrete rules, and can be modified as a trader chooses depending on market opinion.
For those unfamiliar with the strategy, the trade management guidelines were updated on October 22, 2014, and can be found here:
Link to Articles
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,