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This pullback is just what we needed on this trade… there was way too much risk with the RUT at 1210, so I’m going to exit this trade with a loss and simply move on.
It’s a little tricky on how to exit this trade, so let’s split it up.
There are 4 parts to all the open orders:
1. A jul 1120/1180/1040 put butterfly
2. A jul 1100/1140/1180 iron butterfly
3. A jul 1140/1180/1220 call butterfly
4. An aug 1180/1200 call back spread as a hedge
Here’s what to do:
1. For the jul 1120/1080/1040 put butterfly, just let it expire. There’s 0.33 left of value so if you want to just float an order out for 0.30 that’s fine.
2. For the July 1100/1140/1180 iron fly, buy to close the whole thing at 35.20. You may need to split up the trade.
3. For the July 1140/1180/1220 call butterfly, sell to close the whole thing at 16.75
4. For the Aug 1180/1200 back spread, sell to close at breakeven.
All things considered including slippage, commissions, and the realized profits, this trade finished with a loss of around 4% relative to max risk. This is a “good” loss, but would not have happend had we not had a big pullback.