RUT March Iron Condor – Update

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Starting with a lower open RUT started to moveup and it’s now moving into new territory. My BPS hit my exit criteria and I was able to buy it back for $0.20.

When the tide rises, it lifts all the boats and one doesn’t want to fight with it. Closing this trade at $0.20 yielded $0.70 profit as I had opened this trade at $0.90 credit. Check out the overall trade here. Now I have 850/860 BCS left and I will have to keep a close watch if RUT is about to touch my adjustment point and start to threaten this leg. However by closing BPS, I can use that margin to open another BPS at an appropriate time.

Stay tuned, profitable trading

OptionPundit

Comments

8 responses to “RUT March Iron Condor – Update”

February 22, 2007

Chris

What is your adjustment point on the 850/860 BCS?

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February 22, 2007

OptionPundit

Not limted to, but generally speaking when there is th 25% probability of short being penetrated.

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February 23, 2007

MikeN

Good call on the downside. I bought the 760/750 for $.15 yesterday and am left with the 850/860 call vertical.

By the way, thanks for posting these trades. I’m learning a lot from your posts, especially your rationale for adjustments.

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February 23, 2007

OptionPundit

Thank you for your kind words Mike. If you like OptionPundit portal, why not forward it others or mention it in other forums as well so others can also benefit.

Profitable trading,

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February 24, 2007

Pablo

Now that you have sold out your BPS would you adjust upward the BCS if and when it is threatened or would you just buy back the position? Would you consider rolling out the BCS to April and rewriting an April BPS? So many questions!! Also you mentioned that when you bought back the BCS one of your reasons was that you could reduce your margin on the IC. I thought most brokers only require margin on the one side of the trade. Since you still have the BCS it shouldn’t have any effect on margin. Am I wrong on this? Thanks for OP and all your insights. They really help confirm some of my moves since I am fairly new at ICs. Thanks again Pablo

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February 24, 2007

OptionPundit

Thanks Pablo.

Well I haven’t yet shared the moves that did make. I have opened another BPS for $0.95 credit ($800/790) as I am not expecting RUT to fall below $800 till march expiration. This gives me a little more cushion. My BCS is still open and there is 78% chance that it will expire worthless. I will look for adjustments if needed, only next week. Theta will work in my favor over the weekend and it is going to accelerate from next week. This months Iron condor is very diffferent from what I have done in past six months on RUT.

On the margin part, yes you are correct. By buying BPS back doesn’t reduce my margin. What I meant was that I can use that margin now to open another BPS either in the current month or the next.

It’s an intersting month for RUT…one needs to have good money management in place for this trending giant.

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February 26, 2007

jordanbulls

Hi OP,
What % of your portfolio is on IC? Also when calculating probability, are you using IV based on current month ATM strike or IV based on the strikes you are buying/selling?

By the way, I’m a registered user of your site. I recently posted a comment and saw a response, but I’m not able to see the details of the response. Is there something I’m missing out? Thank you.

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February 26, 2007

OptionPundit

Jordanbulls, may I leave this % allocation question for future discussion. I plan to write about this in details.

For probability I generally use delta as proximation. Jordanbulls, based on records this was your first comment. Probably the last one wasn’t saved…how about you checking it out again and if you still face issue, pls let me know.

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