RUT December Iron Butterfly Adjusted to Downside
The downside adjustment for the December position filled for $5.85 debit. RUT was at approximately 1159.86 when the order filled.
The graph of the adjusted position is below:
RUT December Iron Butterfly after downside adjustment:
The position summary after the adjustment is as follows:
SHORT December 1190 Call
LONG December 1240 Call
SHORT December 1150 Put
LONG December 1100 Put
LONG December 1250 Call
The position is now a 40 point wide Iron Condor.
There are now only 17 days left before December expiration. After having to adjust this position twice over the last week, first by rolling the call spreads, and now having to roll the put spreads, the decision is a difficult one whether to make a third adjustment if it is called for. With our short call strike now at 1240, there is plenty of room for a rebound off of today's drop (although anything can happen as we've seen this cycle). That decision will be an individual trader's choice, but as of today I am inclined to let the position collect some theta if it stays between the short strikes, and exit the position 1) at either short strike, or 2) at the pre-set max loss.
I have set the next action trigger price will be if RUT continues to drop and reaches 1150. At that time, the position will either be closed or adjusted. If another downside adjustment is called for, it will likely be necessary to roll down the opposite side to get more credit in the trade, as it outlined in the guidelines.
The trade guidelines were most recently published on October 22, 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,