Have a question on Iron Butterflies. I am looking at SPY and added 2 point wings for 10 contracts for all legs. But I saw a vid that added an extra contract on the buy side, which is showing on Think or Swim to have a possible loss, but also infinite profit. I have Buy 198 call, sell 195 call, sell 195 put, buy 193 put. on the 195's I have 10 contracts, on the 198 & 193 I have 11 contracts. Since I get a credit on this, but then Infinite profit if it blows through the wings, it seems if this is correct, that this might be a good trade to put on for a couple weeks if I expect some directional moves? I am thinking about the low probability of a butterfly and this might give high probability of a directional move, while requiring low margins, since the risk seems low? Can you help me figure this one out? Thanks, Ron
He didn't talk about the possibility of being exercised at the expiration. How would that affect the overall P/L?? Sounds like you could lose more than the just $124??
I think you missed it. He covered it at the end of the video. He said, when you get very close to expiration and you see you have already made 90% of the profit, you should consider getting out of all options. Personally, I would get out regardless of whether I made profit or not. I would not want to exercised on expiration date and possibly get stuck with shares. If you get out, your loss should not exceed $124. You also have to remember that you have to pay commissions to the broker. There is, however, a different risk that he didn't talk about. What if you underlying security goes outside of strangle range by a lot long before expiration? This increases chances of one of your options getting exercised, either by someone who have had enough and decided to take a profit or by someone who wanted to own shares that are due dividend (loss to short call on ex-div date). My solution to this problem would be to take your loss and get out of all options.
Have a question on Iron Butterflies. I am looking at SPY and added 2 point wings for 10 contracts for all legs. But I saw a vid that added an extra contract on the buy side, which is showing on Think or Swim to have a possible loss, but also infinite profit. I have Buy 198 call, sell 195 call, sell 195 put, buy 193 put. on the 195's I have 10 contracts, on the 198 & 193 I have 11 contracts. Since I get a credit on this, but then Infinite profit if it blows through the wings, it seems if this is correct, that this might be a good trade to put on for a couple weeks if I expect some directional moves? I am thinking about the low probability of a butterfly and this might give high probability of a directional move, while requiring low margins, since the risk seems low? Can you help me figure this one out? Thanks, Ron
I love trading options..
Beautiful explanation 🤗
Hello from Germany i can not find the iron butterfly strategie on your website maybe you have a link big greetings from Germany
He didn't talk about the possibility of being exercised at the expiration. How would that affect the overall P/L?? Sounds like you could lose more than the just $124??
I think you missed it. He covered it at the end of the video.
He said, when you get very close to expiration and you see you have already made 90% of the profit, you should consider getting out of all options. Personally, I would get out regardless of whether I made profit or not. I would not want to exercised on expiration date and possibly get stuck with shares. If you get out, your loss should not exceed $124.
You also have to remember that you have to pay commissions to the broker.
There is, however, a different risk that he didn't talk about. What if you underlying security goes outside of strangle range by a lot long before expiration? This increases chances of one of your options getting exercised, either by someone who have had enough and decided to take a profit or by someone who wanted to own shares that are due dividend (loss to short call on ex-div date). My solution to this problem would be to take your loss and get out of all options.
Wit Me LOL