RUT June Iron Butterfly has reached the downside adjustment trigger of 1240, but we are not adjusting today.
Today's selloff has caused the June RUT Iron Butterfly to reach the downside adjustment trigger point of 1240. However, as noted when the trade as opened on May 18, the planned adjustment was dependent on the actual position at the time the trigger was reached. A summary of the position is as follows:
This monthly position for the June expiration (Option Code RUT150619) was opened May 18. Position details below.
- SOLD RUT June 1250 Call, 17.50 credit.
- BOUGHT RUT June 1300 Call, 1.65 debit.
- SOLD RUT June 1250 Put, 24.12 credit.
- BOUGHT June 1200 Put, 8.50 debit.
Order was filled as an "Iron Condor" for $31.47 net credit (all four legs).
Additional Order to cut Deltas on upside:
BOUGHT RUT June 1310 Call
Order for extra long call was filled for $1.25.
Even with today's selloff, the position is in decent shape; the current graph is shown below:
RUT June Iron Butterfly:
With RUT at 1234.56, the position is +$181.97. The expiration breakeven on the downside is still almost 15 points away, so we are not planning to adjust the position today. If RUT continues to sell off tomorrow, we will likely make the downside adjustment. The planned adjustment as per the guidelines is to roll the threatened side 20 points.
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,