How to Expand the Profit Zone on Butterfly Trades
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The most popular options strategy on SMB's options trading desk is the butterfly. In this video, we walk you carefully through a professional adjustment that is used to extend the profit range of a butterfly and have plenty of profit remaining in the trade, expanding your chances for a win significantly.
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Numbers all mixed up - anyone paying attention here??? SMB get your numbers right plz - great strategy messed up by poor presentation
I really feel like slapping myself for not realizing that I could have been trading iron butterflies and just converting them over to iron condors when they turn sour.
Are you making good money
Seth - that slide at 6:15 has a huge copy/paste error. Looks like it was copied from the broken wing butterfly video and numbers modified, but the description on each row is clearly wrong. Looks like it wasn't updated after pasting.
Thank you for the interesting video. It is an interesting way to adjust an iron butterfly. However, what you did not explain is that after adjustment your risk increases should the share price continue to go up and go well above the $2,825 in this example. At the start your spread is $100 and you get $66.23 in premium per share so your risk per share was $100 - $66.23 = $33.77 so $3377 in total. After the adjustment your spread is still $100 but now you reduced your premiums from $66.23 to $14.84. Your new risk per share is then $100 - $14.84 = $85.16 so $8516 in total. That is a significant risk increase. That is fine and it is still an interesting repair strategy but am I correct that it increases the risk or am I missing something?
the slide at 6:15 does not match the trades in the matrix, But otherwise well presented, thanks
@ 6:20 slides do not match the setup seen in the trading window.
Love these videos but why do the strikes show 100 points wide then 25 points wide?
This is exactly what I need to learn to execute better. Been reading this strategy for two weeks now after backrestimg 2 weeks before. 1 red day this week for a 1500 L. I deserve it because the market gave me not one but two chances to come back n close for 850-900 profit. I was blinded by ego n my 55% PT. Was wondering if this would be successful for 0 day dte
Why not roll up the untested put side for increased credit?
I agree with you. I got a bit confused on this adjustment. I would have explained it differently and show the new position graphically. In an IC when adjusting I take profits on the winning side (locked in profits). Then roll the winning side closer to get more premium, thus less risk. Name of the game when wrong is to lose less, NOT necessarily win.
I really like the options videos and have been very well done and helpful. Never really thought about making an adjustment by putting on a fly within an existing fly trade. Very nice.
What happens if SPX closes at 2925?
Seth, I’m curious how much did the capital requirement increase when you applied the adjustment to Iron Condor. Thank you!!!
Aren't index options European style?
Why did you pick 2825 as adjustment? Your videos are very interesting but I can visualize more clearly if you show the risk graph, and explain if the delta of 2825 had anything to do with your decision. Also, do you guys really go to expiration on all of your trades? I find that somewhat confusing.
Very NICE VIDEO AND INFORMATIVE. Reduced the overwhelming feeling of Butterfly trade set-up. Need to w as tech the video a couple more times to be very comfortable we with the set-up.
I love these videos! I would like to hear about why someone would choose a butterfly vs an Iron butterfly. Thanks
If I’m not mistaken, any “Iron” before a strategy it’s mostly PUTs oriented.
But I would like to be corrected as I’m new in option trading and unsure if this is fact.
I definitely need a cheaper company to play this game. WOW!!!
Thank you sir
Oustanding!
When it come to options always show the price charts. Why? You don't have to think about the trade when explaining it or getting it explained to you. example: pbs.twimg.com/media/EDfjPxdVUAEL5jh.png
I have a trade of this type in NIO that I will apply this strategy tomorrow. Thanks. Also, if you could share some 'dos and don'ts' relative to managing/mismanaging winners, that would be great. I've screwed myself royally a few times and I can only assume there may be more on the horizon lol.
Could you just buy back the short and sell a higher short turning it into a debit spread cheaper?
Hey, what kind of stocks are Iron Butterfly suitable for before reports?
Very informative. Would you be able to do the same, a put side butterfly, if the trade went sour in the other direction?
What is the DTE of the original trade?
I never thought that a butterfly can be rerolled and become an iron condor. Great video
Explain the diagonal and calender spreads please
Hi. Have you heard of the reverse Harvey adjustment strategy for iron butterflies...I think it's better than what your suggesting
What about a reverse butterfly?
That was the sorriest thing I ever saw from someone trying to sell a "system". Numbers don't jibe, screens don't match up, nothing but razzle dazzle!
The screen might be off but the trade is solid.
And to think that after 2 years they would have got it right,but no..and they want me to attend their "free"seminar..they must've went out if business..
Great content. How about videos about growing small accounts. Thks .
good idea!
Useless!!!! Math is utter gibberish! But thanks for playing.
Excellent video Seth! Is it correct that the correction to the Iron Butterfly results in new breakeven prices for the trade?