Dec 2016 Butterfly #3 – RUT

Day 1 – 29 Nov 2016

  1. Entry day. 51 days from expiry. RVX was at about 19. Managed to buy the Fly for 9.50, slightly cheaper than the usual 10.00.
  2. Fed will be announcing interest rate decision in about 14 days and RUT is at 10 years high, therefore there is high possibility that it will be trading sideway, or pullback slightly. Even if it continues to move up, it should move at a slower pace until Fed decision on the interest rate. This condition is good for this trade.
  3. Lesson learnt from the previous Fly trade, I have also opened the IWM Long Call to neutralise the negative Delta from the Fly which is 20 points below ATM.

Risk profile on Day2 – 30 Nov 2016.

Day 8 – 6 December 2016

  1. No adjustment needed for this trade. RUT was more or less trading at the same level as when I entered the trade.
  2. But today it looks like it was going to move closer to my breakeven point, so I decided to take the profit instead make adjustment.

Trade Summary

  1. This trade went through the weekend without much movement. Theta had helped generated the profit.
  2. Another reason for the profit was I manage to buy the FLY at a lower debit.
  3. Net profit for this trade is 74.18. It looks small but consistently generating winning trades is what I am aiming for right now.

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