RUT February Iron Butterfly Adjusted to Downside.
The downside adjustment for the February position filled for 6.80. Because of the intensity of the continued selloff this morning, I felt it best to move forward to adjust early rather than wait until the end of the day. Some traders may choose to wait to see if a bounce occurs this afternoon; I chose to act early for this trade setup. Adjustment details are:
BOUGHT RUT February 1000 Put, 47.20 debit.
SOLD RUT February 950 Put, 24.20 credit.
SOLD RUT February 970 Put, 32.10 credit.
BOUGHT February 920 Put, 15.90 debit.
Net debit (all four legs): $6.80
RUT was trading at approximately 970 when the order filled.
The graph of the adjusted position is below:
RUT February Iron Butterfly after downside adjustment:
The position summary after the adjustment is as follows:
SHORT February 1000 Call
LONG February 1050 Call
SHORT February 970 Put
LONG February 920 Put
Long February 1110 Call.
The position is now a 30 point wide Iron Condor.
The next adjustment trigger point will be at either short strike. If either adjustment trigger is reached, we will evaluate the status to determine if it is wise risk management to make another adjustment, or recommend to exit the position. This position will not be adjusted again today; the expiration breakeven on the downside as shown on the graph above is 939.92. If there is not a bounce tomorrow we will consider exiting the trade.
The trade guidelines were most recently published 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,