RUT December Iron Condor is at the third upside adjustment trigger point.
RUT continues to march higher and has reached the upper short strike, the third adjustment trigger. In this weekend's update I wrote that if RUT reached the short call strike at 1180, I would evaluate and determine whether to adjust the position for the third time, or exit and move on. It is a trader's choice, of course, but for those who choose to stay in the position, I am suggesting the trade be adjusted once again to the upside.
A recap of the current position and suggested adjustment follows:
Original Position Entered November 16:
- SOLD RUT December 1140 Call, 29.60 credit.
- BOUGHT RUT December 1190 Call, 8.00 debit.
- SOLD RUT December 1140 Put, 26.70 credit.
- BOUGHT RUT December 1090 Put, 11.60 debit.
Order was filled as an "Iron Condor" for $36.70 net credit (all four legs).
Additional Order to cut Deltas on upside:
BOUGHT RUT November 1235 Call
Order for extra long call was filled for $1.30.
Upside Adjustment November 17:
BOUGHT RUT December 1140 Call, 32.90 debit.
SOLD RUT December 1190 Call, 8.80 credit.
SOLD RUT December 1160 Call, 21.30 credit.
BOUGHT RUT December 1210 Call, 4.10 debit.
Net debit (all four legs): $6.90
On Wednesday, RUT continued to rally, fueled by the FOMC minutes. The position was adjusted for the second time on the upside as follows:
Upside Adjustment #2 November 18:
BOUGHT RUT December 1160 Call, 27.05 debit.
SOLD RUT December 1210 Call, 5.40 credit.
SOLD RUT December 1180 Call, 16.00 credit.
BOUGHT RUT December 1230 Call, 2.10 debit.
Net debit (all four legs): $7.75
The position is now a 40-point wide Iron Condor, with the short call strike at 1180, and the short put at the original 1140 strike.
Below is the current position as of this morning:
RUT December Iron Condor:
The guidelines call for the threatened side to be rolled 20 points if RUT reaches either short strike.
This can be accomplished with one order: "BUY Condor"; in this case all Calls. The adjustment will be:
BUY RUT December 1180 Call.
SELL RUT December 1230 Call.
SELL RUT December 1200 Call.
BUY RUT December 1250 Call.
This adjustment will put the short call strike at 1200, and the short put at the original 1140 strike. The resulting position will be a 60 point wide Iron Condor.
For those who choose to stay in this position, It is recommended to adjust the position before the close today if RUT remains above 1180. The exact time of the adjustment is a trader's choice. Actual fill prices will be posted if the adjustment is executed.
As always, stay keen on your risk management and trade carefully,