Last night on the call we discussed the idea of selling a tight June RUT Iron condor 730/740/720/710 for a credit of $8.57, leaving us a risk of $1.43 + commissions.
We took this paper trade because we have a bias that the RUT will possibly pass through the 720-730 area 10 to 4 days prior to June expiry.
Our goal is allow the Theta to burn off of this position. Our profit target is a return of 50% to 100% ROI, so in this case we are looking to buy back the position for $7.00 to $7.75. The only way we can collect that type of return is if we wait patiently for this trade to ripen and for the price action to cooperate.
Our current breakeven on this position is between 670 and 738 so we will be patient and evaluate this position again in 2 weeks to see if we need to make any type of adjustment.
Note the current Delta of -21.83 gives us a slightly bearish bias which we actually like in the current uber-bullish environment. We are well positioned for any type of pull back.
RUT JUN Tight Iron Condor 730/740/720/710
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