Alert: Adjust RUT Boxcar

Ticker: RUT
Price: $1736.75
Date: 3/17/23 10:29 am EST
Underlying: Russell 2000 Index

Est. Net Credit/Debit: $10,000

Master Portfolio Contracts: 10

Notes:

With the market being up yesterday, the RUT boxcar moved back under the tent. However, with the market pulling back this morning we need to make an adjustment.

This is a two-part adjustment. We will be selling the debit spread back to the market for a small profit. We will then be adding a call leg creating an iron butterfly. This will bring in approximately $8500 and decrease our risk by almost 50%.

We will then manage it as a standard iron butterfly. If we get really lucky the market will move back up to 1775 but I wouldn’t count on that. We will probably manage it early next week to avoid the rapid gamma effects toward expiration.

Please be aware of this means we will probably be in this trade for a few more weeks before we can significantly reduce the paper losses.

Markets are still volatile and wide. Work the order and be patient.

Trade Detail:

Trade Action 1:
STC -10X RUT 24-MAR 1800 put
BTC +10x RUT 24-MAR 1795 put

Price:  3.00 – 3.75 credit PRICES ARE WIDE.  

You can start higher than the mid price and wait 5 mins and start walking it down until it fills.  These prices are added based on what we’re seeing now, but we will not trade it in the account until after the alert goes out. 

 

We will then be selling the 1775/1800 call spread for a credit of around 8.50. 10 contracts. This keeps our margin at 25,000, the debit spread was canceling some of the margin. However we now have a symmetrical iron butterfly which we can manage.

 

Trade Action 2:
STO -10x RUT 24 MAR 1775 call
BTO +10x RUT 24 MAR 1800 call

Price: 7.10 – 7.80 credit PRICES ARE WIDE.  

You can start higher than the mid price and wait 5 mins and start walking it down until it fills.  These prices are added based on what we’re seeing now, but we will not trade it in the account until after the alert goes out. 

 

Position After Adjustment:
+ 10x 24-MAR 1750 put
– 10x 24-MAR 1775 put
– 10x 24-MAR 1775 call
+ 10X 24-MAR 1800 call