Today we had ANOTHER moderate up move in RUT. The 55 day trade lost about $220 today but is still in the green. We hit our adjustment point early this morning but I decided to wait to see if we got a pull back. We did not. So, I started looking at adding the 590/630/670 butterfly as planned, however, in my opinion, it was way over priced for this time period and I was not willing to “pay the price”. I put an order in for what I was willing to pay and let it sit much of the day; it did not get hit. Since the prices were high and I wanted to make an adjustment, I sold my ATM 580/620/660 butterfly at a good price and am waiting till tomorrow to see if I can get a better deal on the 590/630/670. This may seem, to some, as risky but in reality it is not. The butterfly I sold was at about the most I could get for it for this time period, so a large move either way and that butterfly would have lost money. The butterfly I am buying was at about the most I would have to pay for it in this time period, so if I wait and we get a decent price move, I can buy it cheaper tomorrow. Plus removing the 620 butterfly cut my Delta so my up side risk is less. My risk? Well if the market just sits there and does nothing tomorrow, I would have been better off paying up today and may need to pay even more if I want in. So anyway, I’m rolling the dice hoping for some movement tomorrow. This is what the position looks like right now.
On the 30 Day Method 1, no adjustments were needed. The upward price movement did cause the position to lose a little today and the position is now down a few % but in general the trade is going fine.
On the 30 Day Method 15, we went through our adjustment point and added a 580/630/680 butterfly as planned. The trade is down $230 which is less than 5% of our planned capitol so no issue there. It may be difficult to hit our $1500 profit target now however, so I’m lowering the target to $1000.