Thanks, @jaypaul1988 - glad you find it helpful/motivating. From my own experience, that's incredibly useful - especially in the beginning. Good luck!
BlueWaterSailor: trading journey and journal
- Thread starter BlueWaterSailor
- Start date
I want to figure out how to trade b-flies and intent to read all 201 posts of your thread.
If I want to trade butterfly, where should I start?
Thanks.
With peyote.
(Sorry BWS, couldn't resist, hehe. Long time no see! How goes the consulting/RVing/systematizing?)
Maybe I will start with iron condors instead.
Hmmm... never thought of adding butterflies to my peyote. Any particular color, type, number of legs?...
Life's good, bro. Chillin'. Maybe not enough, but that just might be the lack of butterflies...
You're going to add a CONDOR to your peyote?
BRUH. Seriously adventurous.Anyway...
ICs are what they teach to the old farts in the "dEeP oPsHuN SekRiTs" seminars at the golf courses here in Florida - only $3999 per sucker... I mean, brilliant investor, of course. The thing that none of them ever do is figure out the total expectancy of the trades - zero, of course -
Theta is not an edge. You think you're the only guy with a calendar?
-- Sinclair Euan
- minus the friction of the 4 legs times the number of ICs. The suckers, er, iNvEsToOoRs never get past the starry-eyed fascination of "ooh, looka me, I maka de money from de market just like de guys on de teevee!" - and thus don't keep an accounting log.
But hey, it's a hobby.
As some other guy here once said...
Greeks are not an edge. Structuring can be an edge, but related to the vol-surface.
-- destriero
Unless you have an edge, trading is just a way to lose money. Slowly if you have the mechanics down right - and that's not necessarily a bad thing; you're paying a little bit of cash for a priceless education, as I once did - or faster than a greased pig going down a stainless chute (all you've got to do is fuck up your risk management Just That One Critical Time.)
So: flies? Or condors?
Your choice; they're not all that different, actually (a fly is just a condor with its short strikes together.) The big questions are, how much are you getting paid to hold it, what return are you making for what risk, what is your exit plan if you start getting railed sideways (you do know that you can be, right? No? Then go and think about in what scenarios, and how, that might happen.) Also, it doesn't hurt to know what your entrance and exit criteria are, and why you're choosing those structures/what view of the market you're expressing with them.
TLDR: people who do ICs, IFs, or anything at all without knowing why - except maybe because they heard from a friend's uncle's broker's poodle's best flea's second cousin that ItOnceMadeHimLotsOfMoneyHandToGod - are damn fools, and deserve whatever happens to them.
Thanks. This gives me a place to start.
I have been following @destriero's posts on b-fly but don't understand a word he said.
Thanks. This gives me a place to start.
I have been following @destriero's posts on b-fly but don't understand a word he said.
Yeah, well... don't be too surprised; you're not the first nor the last. But there's gold in them there hills, and something like a good half of what I've learned from this site came from his various cryptic pronouncements that I've sweated and cursed over.
Not to blow any smoke, but his threads on butterflies here are the best thing I've found in any finance-related lit, period. The comments in them help a lot - there were some damn smart posters here in the past. Also: unbalanced flies Kick Major Ass - but you have to have a solid view on a) direction, b) time, and c) a strike that the price will approach but will not pass (p-flies in indexes and c-flies in SNs due to the vol smile; YANETUT...)
But yeah, basic risk/return, risk management, and simple accounting are The alpha and the omega of this biz. Otherwise, you're barebacking through the Tenderloin while wearing a Rolex and Louboutins, and every Apache addict on the street leaving eyetracks all over you...
Thank you. I hope this post will start me off in the right direction.
I know he likes unbalanced flies but don't know why.
Have a Merry Christmas and a happy new year.
Unbalanced flies pay quite well, provide somewhat of a nice "brake" when the trade starts going against you (by comparison to a spread), and can be managed... er, somewhat... if the guillotine starts coming down on your nuts. But they do take an advanced degree in Talmudic studies, the Materia Medica of 11th Century Xianzhou, the exotica of the mating habits of the Lepidoptera of Tierra del Fuego, and the ability to dance the Hradec Kralove version of the polka while building a rocketship to Mars that doesn't explode. Or, as Jascha Heifetz once said when asked how to get to Carnegie Hall, practice. Lots and lots of practice.
All the while watching your ass when it comes to risk.
Wishing you a Merry Christmas, Happy New Year... safety for your loved ones (<sigh> I have friends and family in Israel; not having an easy time with that right now) - and good trading in the coming year to all.