Today we are adjusting the position as follows:
Trade: Buy Back RUT April 870/875 Call Spread – Roll (Re-Sell) to RUT April 880/885 Call Spread
Premium: Closing Trade = $90 (0.90) Premium. Rolling Trade = $50 (0.50) Premium.
Underlying Price: $852
Max Return: -1.02%
Break-Even Prices: $880.50
Time Until Expiration: 9 Days
Probability of Loss: 9.68%
Trade Explanation: As we discussed in the trading video yesterday for members I have decided to roll this upper Call Spread of this RUT Iron Condor higher. While I still do believe that the market will continue sideways and the risk of dropping lower is significant, we must reduce the risk exposure on this trade before the market gets too out of control.
As it stands now with this adjustment, our overall profit/loss on the trade will now be 1.02% (or a $10 loss after adjustments per Iron Condor). If the RUT closes below this 880 level then I will be very happy to have such a small loss as opposed to a much bigger loss. Remember that with Iron Condors you are naturally taking on more risk and we need the markets to trade fairly flat. Since the RUT has gone directly higher we do have this added risk that hurts the positions.
As always, please let me know if you have any questions or comments.