Hindsight can often be frustrating for a trader; but I am using the February RUT Iron Condor as a learning experience for all our readers...Paper Trade closed for target.
Yesterday's bearish open on RUT made me uncomfortable remaining in the RUT February Iron Condor, and as I posted the live trade was closed for a loss of (-150) rather than risk having to make a third adjustment. Of course, RUT rallied through the afternoon and once again this morning. I kept the trade open as a paper trade, and was able to close it for target this morning.
I am not doubting or second-guessing my decision, but felt it worthwhile to monitor the trade as a learning experience to see how it performed in such a choppy market. A summary of the position entry, adjustments, and closing is below:
This monthly position was opened Tuesday, January 20; trade details are:
SOLD RUT February 1170 Call.
BOUGHT RUT February 1220 Call.
SOLD RUT February 1170 Put.
BOUGHT February 1120 Put.
Net Credit (all four legs): $36.50
BOUGHT February 1270 call (to cut deltas): $.90 Debit
Adjustment #1 to Upside January 22:
BOUGHT RUT February 1170 Call.
SOLD RUT February 1220 Call.
SOLD RUT February 1190 Call.
BOUGHT RUT February 1240 Call.
Net Debit (all four legs): $7.40
Adjustment #2 to Upside January 26:
BOUGHT RUT February 1190 Call.
SOLD RUT February 1240 Call.
SOLD RUT February 1210 Call.
BOUGHT RUT February 1260 Call.
Net Debit (all four legs): $ 8.25
After this second adjustment, the position was a 40-point side Iron Condor, with the short call strike of 1210, and the short put strike at 1170.
Closing order details February 3:
BOUGHT RUT February 1210 Call.
SOLD RUT February 1260 Call.
BOUGHT RUT February 1170 Put.
SOLD RUT February 1120 Put.
Net Debit (all four legs): $17.79
SOLD RUT February 1270 Call.
Net Credit: $.30.
Net Gain on Position: $246.
For those of you who did not cave and exit the position as I did yesterday, congratulations if you were able to close this morning for target. In closing, once again I will say that I am not sorry that I acted as I did yesterday. There are always times when a trader acts perhaps more on emotion rather than adhering to the trade plan, with the fear of having to take the max loss on a position. It's time to move on, and take the February position as a reason to continue to "have a plan, and trade the plan." Sometimes a trader's intuition guides us to the right entry or exit decision, other times the emotions involved can cloud those decisions.
The next trade entry planned is for the SPX Weekly Iron Condor for the February 2 cycle. As long as the market remains within the trade guidelines, a recommended trade entry will be posted Friday after the monthly Employment Situation report is digested.
As always, stay keen on your risk management and trade carefully,