You have a toolbox of option strategies. Ultimately, you can pick the tool you need to use. Butterflies are generally for markets that aren't trending; however, you can also use them for directional trades. You can just point the center strikes at your target and manage. Iron Butterflies are different from Iron Condors because of the short center strikes. As they decay, you make money (that's why there was an enormous credit at the beginning). The larger the wings, the larger the credit. At the end of the trade, it depends on where the price lands in the butterfly's range, how much time decay you have accumulated, and how much time is left in the short strikes. Butterflies are tricky because you must get the direction and expiration times as close as possible. If you manage them well, you can take slices of profit out of them by watching the intrinsic values decay on the option chains.
@djb7582
5 жыл бұрын
Given these recent explosive market times, an Iron Butterfly seems to be insane. I regularly do Iron Condors on the SPX with a 120 point range and just barely squeak by.
@wmstaceybutts8385
4 жыл бұрын
Donald Bray , agreed. 25 point wings ? You would pay a fortune when spx is 75 points otm. I’ll paper trade this on their TDameritrade platform & adjust for me 👍
@scottsmith4145
2 жыл бұрын
Given this historic bull run ( well until this last week that is lol),, i think selling put spreads is probably the best strategy going. Now its time to reverse and start selling call spreads!
@konikacariapa3289
5 жыл бұрын
Max payoff is when Expiration is as close to the short straddle strikes. The long strangle expires worthless. Thanks for the video. Maybe you could add a risk graph and payoff simulation. THX
@1caroy1
3 жыл бұрын
Video is interesting. In my trading I stay away from the iron fly. I trade 1 DTE expiration flies with a 1:2:1 structure in stocks with high IV and large cap with usually 5 pt wings. It's pretty simple i use high OI on strikes as pinning direction. The higher the vol the cheaper the fly set up and the higher the payout when it pins.
@Oct-jy4dz
Жыл бұрын
Chartie, what Delta are you using? Are you buying ATM ? Or you just consider the high OI & Vol when placing an order. Thanks for sharing.
@HiCallMeMax
5 жыл бұрын
As someone who regularly trades options but isn't consistently profitable, I would gain much more value from videos on trade selection and price target determination as opposed to videos that simply describe the basics of options strategies and how calls and puts work. Can you upload something like this?
@XquiziteX
Жыл бұрын
i learn a lot from this videos... butterfly startegy seems more of a narrow window type trade however in a high V market .. thats prolly not a good idea.. this may work for a " boring " nothing really happening kind of a market ... i think we are literally defining here how many points spx is allowed to move and there isnt much breathing room...if it goes more in either direction.. its a loss.. i think there are many other good options trading ideas for spx for todays time.... but i think this butterfly works very well with any BORING stock ... that doesnt go anywhere ... perhaps im looking at it wrong ...
@razzyp3999
5 жыл бұрын
Love those Butterflys .... Oh Yeah! Well explained Seth.
@cjh985
4 ай бұрын
should discuss settlement timing and risk of holding any credit options after close. Better to avoid risk of big moves after close by buying back any credit options before 4pm EST
@dennisw8026
5 жыл бұрын
SPX can blow through a 25 point spread in an afternoon!
@scottsmith4145
2 жыл бұрын
Doesn't matter. That's not the point. Its where it ends up at expiration that matters.
@josemelena1885
2 жыл бұрын
Thanks for the info looking forward to signing up for one of the classes
@FadiD86
5 жыл бұрын
Thank you for breaking down this strategy, I've been curious about butterfly strategies for income for quite some time.
@pollito5452
4 жыл бұрын
Some asking, this is 10 days from expiration, at minute 4 top of page says that. Youre welcome.
@mrakun
4 жыл бұрын
thanks!
@ming-juinliu4513
Жыл бұрын
Very informative!
@jasonstone4693
3 жыл бұрын
What’s your exit if goes against you? 1, 2,3x credit received? Or at break even point?
@JonMcDough
3 жыл бұрын
I'm curious what happens to each leg of these index options (or regular options) if the market is frozen through expiration as in the case of a major national or global event? It would be interesting to know your take in winning and losing scenarios.
@scottsmith4145
2 жыл бұрын
This strategy seems to me to capitalize on the reversion to the mean principle of probabilities,, things can deviate from the mean but eventually return. So straddle strikes are pinned to mean. I think this strategy would have problems in a strong trending market and would be best in markets that trade in a range with low volatility. However, they could work ok when a market is entering a low volatility cycle and IV is falling.
@mr.kapoor1551
4 жыл бұрын
Great video
@wmstaceybutts8385
4 жыл бұрын
This seems like a good trade if you have the wings at 85 points or more. I’m going to paper treated now and TD Ameritrade. It says that I would receive about $4200 per contract. I’ll have to find out what the maintenance agreement will be. I would expect it will be about $2000. This could be a potential replacement for the iron condor for me IF Successful. Certainly could be a weekly application.!
@K_M_M_G
3 жыл бұрын
Thank you for the video it’s greatly appreciated. What happens if you hold the position through expiration? Will you be assigned? I’ve been there with equities and held through expiration and unfortunately I was assigned…
@RainMaker777
2 жыл бұрын
You will not be assigned with the index options referred to in the video. You will either be credited the profit or debited the loss.
@lastsmoke
5 жыл бұрын
Every time I try butterfly, I lost the maximum possible loss, what the odds!
@hba8103
4 жыл бұрын
ontheroad looks good for trading when you expect the underlying to stay in a certain range....trading sideways. Not good when underlying is trending or near top or bottom of range. Add to this Trump....and anything is possible with just a dumb tweet. LOL.
@willwarren1483
4 жыл бұрын
"Brilliant". Thank you.
@vicsyoutube
5 жыл бұрын
Lets do a video on how to trade directional options on the expiration day for 900%.
@austinmiller6837
4 жыл бұрын
Why not 1000000%
@vicsyoutube
4 жыл бұрын
@@austinmiller6837 why not indeed
@carlwheeler3403
3 жыл бұрын
This is new to me. Other than Selling ATM for both Calls and Puts, I don't see the difference between and Iron Butterfly and an Iron Condor. I must be missing something.
@dontleavetheporch7460
3 жыл бұрын
Hi Carl. You are not missing anything. An Iron Butterfly is the same set up as an Iron Condor but the short call and short put are at the same strike rather than having the short call above the short put.
@savagemp5
3 жыл бұрын
Realised nobody pointed out something, why is the 25 + 25 point SPX spread requires only $5600 ? It requires $56000 isn't it 50 points x 100 x 10 contracts ? Or am i seeing it wrongly. Cheers.
@orkayen
2 жыл бұрын
for 25 pts Ironfly, you need only 2,500 margin per contract. So, for 10, it should be 25,000. I just viewed the video, I am gonna ask, why only 5600.
@debrazimmerman9601
2 жыл бұрын
@@orkayen subtract the 19400 you received
@ericmccartny2853
3 жыл бұрын
If a long butterfly expires with the share price between the breakeven points you profit, right?
@Yoshimitsu888
5 жыл бұрын
How far out in time do you go with these? 10DTE? 30DTE?
@wmstaceybutts8385
4 жыл бұрын
Lukas Niklaus , there was a statement for 10 days. I will attempt 3-5 days.
@AK-qg7mp
10 ай бұрын
Hello... sorry to be a noob, but just wondering if the short straddle and short butterfly are the same thing? Thanks!
@Enigma_Vids
9 ай бұрын
I’m kind of noob too but I think straddle buys one long call ITM and one long put ITM. Whereas ironfly does short put/call ITM with long call/put spread as the wings
@Enigma_Vids
9 ай бұрын
Why do you let the long contracts expire instead of selling them mid trade? Is it too greedy/dangerous to do that?
@risingsun2677
5 жыл бұрын
last weeks webinar was a no show!
@robwanless9861
2 жыл бұрын
What criteria did you use to select 25 wide? Based on Delta?
@scottsmith4145
2 жыл бұрын
My guess is they use standard deviation probabilities out to expiration.
@indieroller6257
5 жыл бұрын
What was the DTE for the trade example shown in the video??
@WesleyChuen
4 жыл бұрын
10 days
@sam1323123
5 жыл бұрын
Why iron butterfly and not a regular butterfly?
@wmstaceybutts8385
4 жыл бұрын
sam1323123 , the butterfly seems most safe for me Iron butterfly - wings need to be much wider to be safe ? Butterfly Buy 1 Sell 2 Buy 1 Love it when credit premium & no loss possibility . Broken leg butterfly Buy 1 Sell 2 Buy 1 Larger credit & much larger maintenance req & loss .
@hardy2175
6 ай бұрын
Lesser margin and defined risk.
@user-ln2on6cg6y
5 ай бұрын
isn't that a iron condor?
@MK-tj6zo
4 жыл бұрын
Cant you be assigned the short puts that expired in the money??
@ragingbull94mtx
2 жыл бұрын
SPX is cash-settled.
@marionpawlowski7645
4 жыл бұрын
You should show what happens when the Index hits 2860 which would be a large loss. You have to start showing what happens when a trade does not work.
@WesleyChuen
4 жыл бұрын
lol. Just tested it with Feb 4th, 2020 data. One day it already blow through 50 points by a gap up on Feb 5th with SPX. You can only use this strategy on a stock that doesn't move that much. Not much you can do to fix it.
@TheFu1709ck
5 жыл бұрын
Go more into detail please
@orkayen
2 жыл бұрын
Ironfly of 25 wide and 10 contracts should require 25,000 capital. Why do you say 5,600?
@ragingbull94mtx
2 жыл бұрын
Because you receive a large credit from selling the at-the-money put and call which reduces your capital requirement. The numbers are correct.
@rsa108ify
5 жыл бұрын
Butterfly is gambling in this volatile market. Chance of profiting maybe 5-10%. Not worth trying. I had 10 different strike B.F.s on $BYND and non of them hit.
@livelovesail5184
5 жыл бұрын
Your problem was gambling, not trading. Beyond is a gambler's stock at best extremely overvalued and the volatility will break you.
@russzee
4 жыл бұрын
A butterfly trade on SPX is basically a lotto trade. It is most definitely not a strategy to generate consistent monthly income. I generate monthly income trading option selling strategies and I only play butterflies with ETFs or Stocks that are likely to revert to the mean.
@skilach
3 жыл бұрын
it seems like just regular iron condor
@michaelwescott8064
3 жыл бұрын
The only difference is the shorts have the same strike on a butterfly , the condor will have different strikes.
@FundedFuturesTrader
Жыл бұрын
Been better if you used 1 contract each as an example instead of crunching all those numbers.
@ryannoe86
2 жыл бұрын
I like your content but you set up to talk about adjustments and then it ended.
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