The march upward continues; RUT reached our upside adjustment trigger point and adjusted as per the guidelines.
At approximately 10:45 est. Tuesday morning, RUT broke above our upside adjustment trigger price of 920. As I mentioned in the trade entry recommendations, I usually try to wait until the end of the day to adjust, especially with a monthly trade. This always depends on the p/l of the position at the time it reaches the adjustment point, and how quickly the market is moving. Making adjustments is an integral element of non-directional trading. However, I am always cautious about adjusting prematurely and being caught in the classic "whipsaw".
This morning's strong up-move and the continue to trend upward signaled an adjustment was needed at that time. I felt it was prudent to make the adjustment instead of waiting later in the day. At 10:45 am est. with RUT at 924.82, the put spreads were rolled up 20 points. The adjustment order was:
BUY May 900 Put
SELL May 850 Put
SELL May 920 Put
BUY May 870 Put
This resulted in a credit. The credit for the adjustment was $4.10.
Below is a graph of our current position:
RUT May Iron Butterfly after adjustment
The adjusted position is now:
The position is currently -$244.30, down 4.8% of the maximum allocated margin ($5000).
Our next adjustment trigger points are:
UPSIDE at 930: Roll call spreads up 20 points resulting in a debit:
BUY May 920 Call
SELL May 970 Call
SELL May 940 Call
BUY May 990 Call
DOWNSIDE at 910: Roll put spreads down 20 points for a debit.
BUY May 920 Put
SELL May 870 Put
SELL May 900 Put
BUY May 850 Put
An update will be posted if another adjustment is needed or if target gain is reached.