March RUT Iron Butterfly order filled.
Order executed for this new position:
- SOLD RUT March 1220 Calls.
- BOUGHT RUT March 1270 Calls.
- SOLD RUT March 1220 Puts.
- BOUGHT March 1170 Puts.
Order was filled as an "Iron Condor" for $34.30 net credit (all four legs).
BOUGHT RUT March 1300 Call.
Call order was filled for $1.40 debit
Margin/Risk is calculated by the width of the wings ($5,000), less credit received plus the cost of the long call.
Margin/Risk for this trade: $1,710.
Target Gain: 5% of the gross margin ($250/contract)
Max loss: 10% of the gross margin ($500/contract)
Below is the risk graph of this week's position as shown on my broker's platform:
RUT March Iron Butterfly:
The adjustment trigger points for this position are if RUT moves up or down 10 points from the center of the Iron Butterfly. Adjustment point on the call side would be if RUT reaches 1230, and the downside adjustment would be at 1210. Note that the actual adjustment trigger on the downside may be slightly below 1210, depending on market conditions and position status at the time RUT hits 1210. Because the Iron Butterfly is negative delta by nature, we can often wait a bit longer to adjust on the downside. Also, because we have the long call, we can also be a bit patient on the upside adjustment, again depending on position status and overall market.
For those unfamiliar with the strategy, the trade management guidelines were updated on October 22, 2014, 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,