RUT is hovering near the upside adjustment point on the September Iron Condor.
The RUT September Iron Condor is reaching the upper adjustment trigger point at the short call strike of 1240. Below are the specifics of the position and recommended adjustment:
Original Position Opened August 15:
- SOLD RUT September 1240 Call, 18.80 credit.
- BOUGHT RUT September 1290 Call, 2.25 debit.
- SOLD RUT September 1240 Put, 20.30 credit.
- BOUGHT RUT September 1190 Put, 7.19 debit.
Order was filled as an "Iron Condor" for $29.75 net credit (all four legs).
Additional Order to cut Deltas on upside:
BOUGHT RUT September 1300 Call
Order for extra long call was filled for $1.35.
Margin/Risk is calculated by the width of the wings ($5,000), less credit received, plus the cost of the extra long call.
Margin for this trade at entry: $2,160.
Target Gain: 5% of the gross margin ($250/contract)
Max loss: 10% of the gross margin ($500/contract)
On Wednesday, August 17, RUT reached the downside adjustment trigger of 1230, and the position was adjusted as follows:
BOUGHT RUT September 1240 Put, 30.40 debit.
SOLD RUT September 1190 Put, 11.60 credit.
SOLD RUT September 1220 Put, 20.20 credit.
BOUGHT RUT September 1170 Put, 7.40 debit.
Net debit (all four legs): $6.00
The position summary after the adjustment is as follows:
SHORT September 1240 Call
LONG September 1290 Call
SHORT September 1220 Put
LONG September 1170 Put
LONG September 1300 Call bought at trade entry to cut position delta.
Below is the risk graph as of the close yesterday:
RUT September Iron Condor:
Since this position has already been adjusted once, the guidelines call for the threatened side to be rolled 20 points if RUT reaches either short strike, or 1240 on the call side. This can be accomplished with one order: "BUY Condor"; in this case all Calls. The adjustment will be:
BUY RUT September 1240 Call.
SELL RUT September 1290 Call.
SELL RUT September 1260 Call.
BUY RUT September 1310 Call.
The current debit (all four legs) is showing a mid price of 8.45 as of the close yesterday, but that will change depending on when the adjustment is made.
The adjusted position will now put the short call strike at 1260, and the short put at 1220, a 40 point wide Iron Condor.
It is recommended to adjust the position before the close today if it appears that RUT will close above 1240. It is a trader's choice as to when to make the adjustment depending on your market opinion and trading schedule.
Actual fill prices will be posted when the adjustment is executed.
As always, stay keen on your risk management and trade carefully,