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First loss on RUT IC in 12 months

Published on July 27, 2007

First loss on RUT IC in 12 months

July 27, 2007

(for details pls visit www.OptionPundit.net)

Iron condor on RUT has been one of my most successful income trading strategy. I have been generating consistent double digit returns for past 11months on this profitably.

winning-trade_17.jpgSo here we go, here is my 1st or maybe 2nd loss on RUT Iron condor in 12months time. No excuses but my travel hurt this one (as I had feared when I discontinued the OPN due to my busy schedule). As you would notice from the chart that RUT has been falling from cliff and I know 775-780 offers a very real support point (also my BPS leg of the IC 780/770), I would like to close it vs making adjustments.

winning-trade_16.jpgwinning-trade_14.jpg 

So here is how it started- Opened 910/920 and 780/770 call for $1.90 credit. RUT dropped and I bot my $910/$920 BCS for $0.20 and opened $890/$900 BCS for $0.80 credit. RUT further dropped and I bot $890/$900 for $0.20.  Thus my credit increased from $1.90 to $2.30. But in past few days RUT fell rapidly and I had no chance to adjust or close due to travel, thus today 780/770 I bot back for $3.50. Net loss on this RUT iron condor is $1.20 on $7.70 margin i.e.  15.6% loss. I chose to close it vs adjusting as I would like to use this freed-up capital for some other great opportunities.

One key take away though- when on travel, better cash out and get back to the business when back or use conditional orders to trigger your orders. I knew this but I took it lightly as I thought I maybe able to access net from some locations 🙂 Part-n-parcel of business.

Cheers and profitable trading, OP

4 Comments

  • Avatar jordan says:

    OP,
    Thank you for sharing this trade, good lesson for us all.

    Just curious if freeing up capital for other better opportunities was not an issue, would you have considered salvaging this trade? If yes, how would you do it?

    Thank you

  • Avatar Dan says:

    OP I had a bull put spread 770 short/760 for 0.65 credit , 20 contracts each , I closed it with 2.25 debit ( loss) today.

    Sold 730/720 and 840/850 IRON CONDOR , 30 contracts each for enough credit to cover my losses this month. There is nothing you can do when the market falls like this as it did today. You can blame it on travel, but even people monitring it had a hard time.

  • Avatar jordan says:

    OP, another question: where would you set your trigger point for the conditional order? Thank you.

  • Avatar Robert L. says:

    All in all, those were some good adjustments.

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