Trade Update Notice

Earlier today, Oct 2, 2008, I covered the call portion of my current November RUT iron condor. Paid $0.35 for the Nov 810/820 call spread.  That leaves me short the Nov 620/630 put spread. 

Total remaining credit: $2.80.

With RUT' closing at 637+ today, the index has declined by 100 points since I opened the position.  That's a big move!

There was no call spread that I wanted to sell as a hedge against the puts.  If the market declines again, I'll be forced to reduce, or close the position.  On a rally, I'll have three choices: find a call spread to sell, buy in the put spread, or hold as if I still owned the whole iron condor.

116

2 Responses to Trade Update Notice

  1. TR 10/03/2008 at 7:08 AM #

    Mark
    Can you please expand on your thought process as to why you did not sell another call spread? This is a really interesting learning opportunity for me.
    Was it becuase you couldn’t find a call spread at an attractive price? Are you expecting RUT to bounce up? Do you have other positions such that your portfolio is delta neutral? Do you think there is too much volatility right now and as a result you are reducing your positions?
    Rgds
    TR

  2. Mark 10/03/2008 at 8:34 AM #

    TR,
    1) I never expect anything in the market
    2) I am unwilling to sell a call spread where I can get hurt on a rally. I’d rather just spend the 35 cents and do nothing.
    3) If I can sell a spread with the short 770 or higher, I will. The premium is just too small with RUT this low.
    4) Not interested in selling anything resembling 720/730.
    All the above is my comfort zone. My personal decision. I do not recommend that for anyone else.