RUT July Iron Butterfly is at the downside adjustment trigger point of 1280.
Today's selloff has put the July RUT position at the downside adjustment point of 1280.
A recap of the current position and suggested adjustment follows:
Original position opened Monday, June 22 :
- SOLD RUT July 1290 Call, 17.75 credit.
- BOUGHT RUT July 1340 Call, 1.05 debit.
- SOLD RUT July 1290 Put, 16.40 credit.
- BOUGHT July 1240 Put, 4.90 debit.
Order was filled as an "Iron Condor" for $28.20 net credit (all four legs).
Additional Order to cut Deltas on upside:
BOUGHT RUT June 1340 Call
Order for extra long call was filled for $1.30.
The guidelines call for the threatened side to be rolled 20 points if it appears that RUT will close below 1280. This can be accomplished with one order: "BUY Condor"; in this case all Puts. The adjustment will be:
BUY RUT July 1290 Put.
SELL RUT July 1240 Put.
SELL RUT July 1270 Put.
BUY RUT July 1220 Put.
The current net debit (all four legs) is 6.10, but the actual cost of the adjustment will vary depending on what time the adjustment is made.
This adjustment would put the short put strike at 1270, and the short call at the original 1290 strike. The resulting position will be a 20 point wide Iron Condor.
It is recommended to adjust the position before the close today if it appears that RUT will close below 1280. Actual fill prices will be posted if the adjustment is executed.
As always, stay keen on your risk management and trade carefully,