Ticker: RUT
Price: $1788.35
Date: 4/12/23 2:21 pm EST
Underlying: Russell 2000 Index

Est. Net Credit/Debit: $21,850 debit

Master Portfolio Contracts: 10

Notes:

Time is running out on the RUT iron butterfly. We could potentially get a little more profit out of it if we waited until tomorrow, however, the gamma effects may negate that if the market moves in either direction quickly.

My suggestion is to close it today. At current prices, it looks like we can close it for around 21.85. We sold this for around 22.55. While it is still a losing trade, this will reduce the cost basis by about $1.50-2. Our cost basis is currently $11.00+ and this should reduce it to nine. That will make it much easier to manage.

We will open a new position either tomorrow or Friday depending on what the market does. I have a few ideas for this. We could go back to the box cars now that the market has stabilized. Doing that we could probably chip away about $2.00-3 every week. That would mean in about 6 weeks we could have a break even. The other option is to convert it to a dragonfly although they do not work as well in RUT. Finally, we could also manage it as a core trade or as an iron Condor or BWB.  What we finally do with it depends on what the market does in the next two days.

Let’s close it today and will manage it tomorrow or Friday.

Trade Detail:

Close the existing RUT butterfly

+ 10x  14-APR 1750 call
– 10x 14-APR 1775 call
+ 10x 14-APR 1750 put
– 10X 14-APR 1725 put

Price: 21.85 – 21.95  debit (as always, start off low and work the order higher when buying back a spread)