Scaling Butterfly in RUT

[Steven Place]

RUT broke to new all time highs today and hit the upper bollinger band. Now’s a good time to start scaling into some income trades.

Here’s the trade:

Buy to open RUT May 1180/1230/1280 put butterfly @10.80 or lower

Here’s a chart of the bid/ask spread and possible fills:

I’m seeing trade prices ranging from 10.40 to 11.00. I think if you start at 10.50 and work your way up, you’ll get filled.

If this is too much size, you can do the same thing in the IWM — May 118/123/128 put fly.

On a 25 point move higher, we will add another round of butterflies.

[James Woodard]

Hi,
What is the potential loss and profit on this fly.
Thanks,
James

[Stormy Seas]

The red lines from the TOS analyze tab show you the max profit / max loss
of the trade at expiration. The white line is the current profit/loss.
A standard fly can only loose what you pay for it. So if you get it for 10.80
your max loss is $1080.

[Steven Place]

This trade is up around 20% and we’ve got 30 days left to expiration, so this is the right time to exit out.

Sell to close RUT May 1180/1230/1280 put butterfly @ 13.50

If you *wanted* to try and milk it further, you could simply buy some Jun call spreads to hedge your upside risk.

[Author]

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