RUT October Iron Condor has reached second upper adjustment point, but holding off for now.
The continuing rally for RUT has put our position under a bit of heat, RUT has reached the upper expiration point. However, in looking at the position this morning, the expiration breakeven is at 1476, so we will watch carefully before adjusting a second time.
A summary of the position is below:
This position was opened Monday, September 18; details below:
- SOLD RUT October 1440 Call, 19.40 credit.
- BOUGHT RUT October 1490 Call, 2.20 debit.
- SOLD RUT October 1440 Put, 17.20 credit.
- BOUGHT RUT October 1390 Put, 5.70 debit.
Order was filled as an "Iron Condor" for $28.70 net credit (all four legs).
Additional Order to cut Deltas on upside:
BOUGHT RUT October 1500 Call
Order for extra long call was filled for $1.25.
Margin/Risk is calculated by the width of the wings ($5,000), less credit received, plus the cost of the extra long call.
Margin for this trade at entry: $2,255.
Target Gain: 5% of the gross margin ($250/contract)
Max loss: 10% of the gross margin ($500/contract)
On Monday, September 25, RUT reached the upper adjustment trigger and was adjusted as follows:
BOUGHT RUT October 1440 Call, 25.50 debit.
SOLD RUT October 1490 Call, 2.85 credit.
SOLD RUT October 1460 Call, 12.85 credit.
BOUGHT RUT October 1510 Call, .95 debit.
Net debit (all four legs): $10.75
The graph of the adjusted position is below:
RUT October Iron Condor after upside adjustment:
The position summary after the adjustment is as follows:
SHORT October 1460 Call
LONG October 1510 Call
SHORT October 1440 Put
LONG October 1390 Put
LONG October 1500 Call bought at trade entry to cut position delta.
The position is now a 20 point wide Iron Condor.
We will monitor the position carefully, and consider making a second adjustment if RUT reaches 1470.
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,