RUT Iron Condor for August

Bulls and bears are on summer vacation. But they left their children behind to keep the market humming along during their well-deserved break. So as the cubs and calves fight it out, I expect much ado about nothing. Enough so to put on an Iron Condor in RUT, the European-style, cash-settled index that tracks the Russell 2000 small caps.

I’m not playing it safe on this one, but I don’t expect to carry it through to expiration. I’ve chosen the 20 delta at the short strikes, which is almost a coin flip in terms of probabilities. I’ve also taken this trade with a little too much time to expiration. Normally, I will take an Iron Condor with a max of 48 days to expiration, but this time I’m playing the summer holiday and hoping to steal some extra theta.

The strikes on the put side vertical are 450/460. On the call side vertical they’re at 560/570. Credit received is $3.15.

The general idea is to take this trade off when price action threatens the short strike. And hopefully I’ve eroded the short strikes enough to get a profit from the trade.


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