RUT February Iron Butterfly Entry Order Filled.
February RUT Iron Butterfly order filled.
Order executed for this new position:
- SOLD RUT February 1000 call, 31.40 credit.
- BOUGHT RUT February 1050 call, 9.50 debit..
- SOLD RUT February 1000 put, 30.95 credit.
- BOUGHT February 950 put, 15.00 debit.
Order was filled as an "Iron Condor" for $37.85 net credit (all four legs).
BOUGHT RUT February 1110 Call.
Call order was filled for $.95 debit
Margin/Risk is calculated by the width of the wings ($5,000), less credit received plus the cost of the long call.
Margin/Risk for this trade: $1,310.
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 monthly position as shown on my broker's platform:
RUT February Iron Butterfly:
The adjustment trigger points for this position are if RUT moves up or down 10 points. Adjustment point on the call side would be if RUT reaches 1010, and the downside adjustment would be at 990. Note that the actual adjustment trigger on the downside may be slightly below 990, depending on market conditions and position status at the time RUT hits 990. Because the Iron Butterfly is negative delta by nature, we can often wait a bit longer to adjust on the downside. Also, because we have the long call we can also be a bit patient on the upside adjustment, again depending on position status and overall market.
For those unfamiliar with the strategy, the trade management guidelines were updated on August 20, 2015, 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,