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However, the actual truth is PDF (probability density function ) is defined for continuous random variables, whereas PMF (probability mass function) is defined for discrete random variables. The probability density function measures continuous variables—stock and investment returns are...

It's called a 3 wave.

That's why we have standard deviations...its basically how options are priced.

yes @ expiry so trading price for delta yields no benefit.

That's better...little more risk but better profit potential.

Yes but the fly is all about @expiry and the spread returns better @expiry.

No...I said probability of profit favours selling a pc spread over buying one. :) Anyway, the source is the pnl chart.

Well I was trying to calculate with the stock position not just the ratio spread...so it was more like a fly.

So a butterfly offers slightly less risk for slightly more profit, but with a smaller MAX profit window AND a second break even level leading to losses? That's it? So basically a butterfly is used so traders can sound cool saying they "Put on a fly" ? and make everything more complicated than it...

Taowaves math was wrong.

That's what my spreadsheet pnl looked like when you replied originally! So it works!

If I'm understanding this correctly (and I'm probably not) you're saying to short a put at the max profit of the fly...but that would be itm so if price doesn't move up I am getting assigned at a loss (price-strike less credit for the fly and the short put) ? (Ignoring any loss on the stock...

Yes! The ratio spread when combined with shares becomes a (synthetic?) fly with the shares acting as the upper wing. My stock position in the stock repair strategy would be at a break even 0 (-5050 +5050)@ 19.72 This is the pnl if I roughly convert the ratio spread to a fly by adding an...

MARA AUG30 17/20

Breakeven for Ratio Call Spread As Net Credit = Higher Strike Price + Difference in strike + Net Premium Received. As net Debit = there will be two breaks even. Upper Breakeven = Higher Strike Price – Difference in strike + Net Premium paid. Lower Breakeven = Lower Strike + Net premium Paid...

There is no added risk if you can open for a credit..but probably not with the spread. Here you could open 17/20 for a $-180 debit...lowering the the break even from 22.25 to 19.72...according to my sheet. The price really jumps around on the ratio spread...from .11 to .50!

"Downside protection is not considered with a stock repair." It carries no added risk as you should be able to open at a credit. Same as just holding a long position...it only improves your break even.

I know but where? If you look at the ratio spread as a separate position then both models agree @ 2600 when price expires @ 20, and the stock recovers 3050. ??? If you use the ratio spread math its: higher strike - lower strike + debit/credit + lower strike. so 20-17=3+-.40+17=19.60 break even...

Both our models agree on the ratio spread: So if we put it together with the stock position we should get: MARA 16.05 Avg price: 22.25 Loss to recover: -5300 @ 20 price has increased $3.05 x 1000 = 3050 + 2600 (ratio spread) = 5650 So my position recovers just under $20 as my spreadsheet...

MARA 16.95 1000 shares @ 22.25 Total loss: 5300 Stock repair strategy 10 17C @ 2.18 20 20C @ .89 Total debit: -400 Results if price goes to 19.83 @ expiry: 10 calls = 19.83-17 =2.83 -2.18=.65*10*100=650 20 short calls = 1780 Stock increase = 19.83-16.95 =2.88 * 1000 = 2880 Total...