It is recommended to adjust RUT Iron Butterfly.
RUT continues to march higher; the May Iron Butterfly opened yesterday is at the upside adjustment point. Below are the specifics of the position and recommended adjustment:
Order executed for this new position:
- SOLD RUT May 1260 Calls, 22.80.
- BOUGHT RUT May 1310 Calls, 2.90
- SOLD RUT May 1260 Puts, 21.55
- BOUGHT May 1210 Puts, 8.50
Order was filled as an "Iron Condor" for $32.95 net credit (all four legs).
Additional Order to Cut Negative Deltas on Upside:
- BOUGHT RUT May 1320 Call
Order for extra long call was filled for $2.10.
The guidelines call for the threatened side to be rolled 20 points once RUT moves 10 points from the center of the position. This can be accomplished with one order: "BUY Condor"; in this case all Calls. The adjustment will be:
- BUY RUT May 1260 Call.
- SELL RUT May 1310 Call.
- SELL RUT May 1280 Call.
- BUY RUT April 1330 Call.
The adjusted position will now put the short call strike at 1280, and the short put at the original strike of 1260, a 20 point wide Iron Condor.
It is recommended to adjust the position before the close today if it appears that RUT will close above 1270. Some traders may take the stance that "this can't keep going up"â€¦..however, I will abide by the guidelines and manage the position as they dictate.
Actual fill prices will be posted if the adjustment is executed.
As always, stay keen on your risk management and trade carefully,