I just found this site, where the information and way of explaining the options strategies are very useful. Thank you very much for your great effort in presenting these educational videos, free of charge.
Why have u made all BWB as credit spread and not Debit spread . I usually do bullish trade with CE and all are Dr spreads. Cud you kindly throw some light on this ❤️
I'm looking at your video and I have a question in regards to opening a call debit broken wing butterfly. Let's say I buy bwb on xyz 100/102/103 this now gives me the same directional move as a put bwb. However, I'm limiting my risk to just the debit I pay. also if I let the spread expire and all 3 legs are itm will I be at risk of getting assigned on the short leg. lets say I have 10 long 20 short 10 long but i want to stay in my positions to receive my profit on a directional move.
Hi and thanks for your comment. In general, regardless of strategy, a short ITM option is always at risk of being assigned (unless it’s a European style option). But as long as the option has some extrinsic value left, it is very unlikely that it will be assigned. Even if it is assigned, your P&L won’t be affected significantly. If the short options of a bwb are assigned, you can just immediately close the assigned shares. If the underlying price already has moved, you can theoretically exercise the remaining long options to close the assigned share position. This means your max loss is still limited. I hope this answers your question. Otherwise, let me know. I also recommend checking out my video on assignment.
@@TradeOptionsWithMe thanks for the reply, and I'll take a look at your assessment video. If I get assigned and close out or exercise my 2 long legs will I still walk away with a profit . And If if the upper wing is itm and short remain atm I can also keep max profit on bwb ? Thanks for the reply
When we say “50% profit target,” is that in reference to the max profit (at short strikes) or to the credit received (i.e. buy to close when position is worth half the credit taken)?
Since this is a defined risk strategy, it won't always be possible (or necessary) to adjust it. But one possible adjustment strategy would be to roll the outer long strike closer to the short strikes (and thereby turning the BWB to a normal butterfly spread). This is best done if you can do so for less than the credit received when opening the position. I hope this helps.
You can check out this post/video on options adjustments for some guidance on how to adjust options trades: tradeoptionswithme.com/options-adjustment-strategies/
In a call BWB I got protection on down side If the underlying price riise to my other leg & probality of crossing the breven point on upper side what to adjust extend the brake even ?
Here is the link to The Strategy Lab: tradeoptionswithme.com/strategy-lab
One of the best explanations of the BWB.
I just found this site, where the information and way of explaining the options strategies are very useful. Thank you very much for your great effort in presenting these educational videos, free of charge.
Thanks for the positive feedback. Glad you liked it.
Excellent explanation and presentation. Thank you. Exactly what I was looking for.
Glad you liked it!
brilliant tutorial. Thanks for sharing
Do you mean that exit at 50% of maximum profit, or 50% of the premium received? Thank you for your time.
Why have u made all BWB as credit spread and not Debit spread . I usually do bullish trade with CE and all are Dr spreads. Cud you kindly throw some light on this ❤️
Can profits improve if we use diagonal spreads inside BWB?
I'm looking at your video and I have a question in regards to opening a call debit broken wing butterfly. Let's say I buy bwb on xyz 100/102/103 this now gives me the same directional move as a put bwb. However, I'm limiting my risk to just the debit I pay. also if I let the spread expire and all 3 legs are itm will I be at risk of getting assigned on the short leg. lets say I have 10 long 20 short 10 long but i want to stay in my positions to receive my profit on a directional move.
Hi and thanks for your comment. In general, regardless of strategy, a short ITM option is always at risk of being assigned (unless it’s a European style option). But as long as the option has some extrinsic value left, it is very unlikely that it will be assigned. Even if it is assigned, your P&L won’t be affected significantly. If the short options of a bwb are assigned, you can just immediately close the assigned shares. If the underlying price already has moved, you can theoretically exercise the remaining long options to close the assigned share position. This means your max loss is still limited.
I hope this answers your question. Otherwise, let me know. I also recommend checking out my video on assignment.
@@TradeOptionsWithMe thanks for the reply, and I'll take a look at your assessment video. If I get assigned and close out or exercise my 2 long legs will I still walk away with a profit . And If if the upper wing is itm and short remain atm I can also keep max profit on bwb ? Thanks for the reply
When assigned, you can basically lock in the profit or loss that you had when you were assigned by exercising the long options.
@@TradeOptionsWithMe thanks for the help got it. I think I will get the bwb a try with earnings coming up
He said that in case of doing it as a debit both wings will lose. How can I understand this?
When we say “50% profit target,” is that in reference to the max profit (at short strikes) or to the credit received (i.e. buy to close when position is worth half the credit taken)?
Max profit
what adjustments can be done if this goes negative?
Since this is a defined risk strategy, it won't always be possible (or necessary) to adjust it. But one possible adjustment strategy would be to roll the outer long strike closer to the short strikes (and thereby turning the BWB to a normal butterfly spread). This is best done if you can do so for less than the credit received when opening the position.
I hope this helps.
How to do adjustments
You can check out this post/video on options adjustments for some guidance on how to adjust options trades: tradeoptionswithme.com/options-adjustment-strategies/
In a call BWB I got protection on down side
If the underlying price riise to my other leg & probality of crossing the breven point on upper side what to adjust extend the brake even ?
Long a call is bullish as well as short a put
Still prefer owning 100 share of stock.
It is 100% gains on the upside.
Income and downside risk can always be managed with options
I'm ashamed that I'm only subscribing now..
Don't be. Thank you very much for the subscription!