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Walt, in a good month, a broken or double broken butterfly managed nicely in a cooperative market ( and I realize that won't happen all that often, but it probably will happen at least once per year) will yield that percentage (10%+) or much more in a month, as well as generating profits (1-3%)...

MegaDeth, In the case of indexes, you are probably correct about a 40% drop, but just because something has never happened does not mean it is impossible. Mr. Taleb has had much to say on that topic-- Black Swans--, and his logic is basically sound, I think. Nevertheless, even if the...

MegaDeth, Here's why it is wrong to sell at a nickle: Many years ago people thought this way and lots of early options traders did this regularly for a long time thinking that is was easy money. However, and I forget the exact details, but I think it was a copper producer (Kinnicott?? correct...

I keep having additional thoughts on this issue! One thing I forget to mention with these is that it may be desirable to keep rolling back for credits, but for most stocks some months are not available. For instance, I looked at Apple as a candidate for this strategy. Right now March is not...

Spin and Walt, Looks like a really good discussion shaping up! A few more comments-- 1) Don't write off the double broken butterfly. Just last month, I set up some that involved a potential reward roughly equivalent to the margin committed, but with a win rate exceeding 75% (of course, the...

Sorry, I accidentally hit the post button before I finished my comments. Continuing, I think the calendar collar idea is an interesting one. It really relies on the fact that you're hedged both ways, but up on cash, hoping for some movement to help you out to either profit within the month...

Dear Walt, I very much enjoy discussing strategies with you. Our Double Broken Butterfly discussion was very interesting and it is one of the best strategies to trade, especially in a slowly trending market like we have now.

erol, thanks for the compliment. Spin, Another superb post, as usual! Nice to see you're still thinking on your own.. :p :D With the amount of posts you have, I'll take a serious pass on being your secretary !!! With these wide spreads, playing around with alternate entry methods is a...

Just a little editing needed on the above post by myself-- when I talk about adding the "calls" together to obtain the cost of the total butterfly, I should have said "puts". Sorry for the confusion.

erol, I'm glad you raised this question. Spin (whom you already know is pretty knowledgeable about options) is referring to the spread in the prices on the options chains and not paying a poor price for the whole package. To really outline this for you, I went and looked up the prices...

Kpetrey, In an Iron Condor, the higher put strike and the lower call strike are the sold ones. You will always receive a credit to begin with when you set up an Iron Condor properly and receive a fair price for it. Your first iron condor is not set up correctly. Also, I'd like to make a...

A few comments: 1) Spin, you are bang on. March was a great time to be doing these credit put spread/ collars. Now, it is more questionable, however. The SPX has already gone from 667 to 1069. The big question is: will it continue to rise now?? 2) By the way, I can't believe those...

matador, I usually start each cycle with about 35-40% of my dedicated option capital in play. Depending on the market action, I may increase a bit as time goes along. I prefer to always keep some powder dry. I also won't hesitate to use up some of my monthly credits to adjust away and...

riskfreetrading-- My answer to the question " When do your short strikes get hit?" is... hardly ever, and my goal is ...never ever. I do not wait for the market to smash my short strike. I adjust away from the current market price and try to keep a reasonable spread between my put and call...

erol, I personally do not use support and resistance very much, but I will occasionally have more insurance spreads on the side that I think is more likely to face pressure. I also will shift the spreads a little toward the direction I think the market is likely to go, but usually no more...

Even though I'm not Grinder, I'll make a comment on this since I have traded a lot of real SPX options. Look first at delta. If your overall delta for the position (which TOS displays for you in the summary) is high, then the position has a distinct possibility of running away from you in...

Adjustments are the key to success with IC's. You can certainly follow Dan's entry rules and do fine. I personally have much more intuitive rules for adjusting that take time to expiry, distance from the short strikes, insurance spreads, and volatility into account. The greeks allow you to...

Chinaman--interesting, but questionable strategy. Obviously, you are flat to the upside (if you hold to expiry) because you're hedged against losses on the short by the call. To the downside, you have a chance to make a profit in a fairly narrow zone between 105 and 108. Unfortunately...

riskfreetrading.... We're still waiting......

If you're just beginning at options, don't read Cottle, Natenburg, Hull or McMillan. They are very good, but a bit more than a beginner can handle. Start with Wolfinger, Cohen, and Thomsett to get the basics, then move on to more advanced material. Also, don't forget that web has many good...