Pada saat saya melakukan tulisan ini, Bearish di RUT tentunya akan mempengaruhi profit and loss pada posisi yang dilakukan pada tanggal 11 July 2007. Untuk itu, Gary (from MarketNeutralOptions) melakukan updated untuk ADJUSTMENT dari posisi IRON CONDOR yang beliau Rekomendasikan. Adjustment tersebut adalah dengan melakukan Roll Down posisi Put maupun Call.
Berikut ini adalah email dari Beliau berikut penjelasannya.......
RUT (Russell 2000 Index) Iron Condor initiated on 11 Jul 2007
by MarketNeutralOptions
Adjustment Summary RUT at 809.3421 days to Aug expiration.
Roll Call Spread
Buy RUT Aug 900 Call
Sell RUT Aug 910 Call
Sell RUT Aug 860 Call
Buy RUT Aug 870 Call
(enter as vertical roll, do not leg-in)
For a net price of $0.70 Credit or better.
Total risk per position: $850 (updated).
Roll Put Spread
Buy RUT Aug 790 Put
ell RUT Aug 780 Put
Sell RUT Aug 760 Put
Buy RUT Aug 750 Put
(enter as vertical roll, do not leg-in)
For a net price of $1.35 Debit or better.
Updated Trade Analysis
What a day! Suddenly the bears came crashing into this tranquil range-bound market that we were seeing. We sensed the weakness in the RUT and that was why we initated the IWM bear call spread on Monday (23 Jul). But we didn't expect it to crashed the way it did yesterday. So much so that we have to adjust our RUT iron condor. Adjusting our RUT iron condor is something we try to avoid at all cost because of the difficulty in getting filled. As you may have guessed it, we too have had a hard time trying to get filled. To make things worse, the market is moving, or shall I say falling fast, and that is affecting the stability of the price. That is why we urged you to enter this adjustment as soon as you can. Otherwise, the price may move on and you might not get the target price that we want.
We apologise for sending two separate emails for this adjustment exercise. I hope they haven't caused any confusion. We were wa
iting to be filled for both rolls and the moment we got filled for the put side, we sent out the advisory. We sent out another one (for the call side) after we got filled. That was why there were 2 emails. One for the put side and the other for the call side.
This analysis will be an update on the entire position that we have currently. It closed below our alarm of 820 yesterday and it wasn't showing much strength today. There was a high chance of our original condor getting more expensive.
What we are essentially doing with this adjustment is that we are moving the entire condor downward in tandem with the market. We spent a net total of $0.65 for this adjustment. This means that our original risk of $785 per position is now increased by $65 to $850 per position (we now have this condor at a net price of $1.50 credit [$2.15-$1.35+$0.70=$1.50]). Our new breakeven points are now 861.5 [860+$1.50] on the upside and 758.5 [760-$1.50] on the downside. This condor now has a very neutral delta of only -0.19. At the time of writing, we have a 69.33% chance of success with this trade. We are now again within 1 standard deviation of the price range.
The reason we initiated this adjustment was because we are getting uncomfortable with the RUT falling closer to our short put of 790. Since this is not a 1:1 condor, it is important that we do not wait till it's too late to do any adjustment. Although we increased our risk by $65 per position, we feel that with this adjustment we can still have a good chance of profit. Without this adjustment, we may be facing a loss if RUT continues to be weak and drops further.
From the daily chart, we can see that the 855 area represents a strong resistance. At the moment, the only support we can use is the 200-day MA (the purple line). RUT broke all support levels in a very quick time. As such, there is no clear indication of the next bottom.
We will continue to monitor this position and inform you if there should be any more adjustment required.
Good trading,
Gary
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