Yeah I guess you are putting that far OTM wing just to avoid the nakedness. I used to dabble in ratio spreads but I guess it never suited me to be honest. Not like short straddles are any safer haha.
Butterfly Option Trades
- Thread starter El OchoCinco
- Start date
Yeah I guess you are putting that far OTM wing just to avoid the nakedness. I used to dabble in ratio spreads but I guess it never suited me to be honest. Not like short straddles are any safer haha.
Could you also indicate what the underlying is trading at with the above info? I like to see the difference of the butterfly body strikes and price of the underlying. Thanks.
Could you also indicate what the underlying is trading at with the above info? I like to see the difference of the butterfly body strikes and price of the underlying. Thanks.
Sure. Right now it is 2021 ES for March (the position above I put down to consider is based on MARCH contract though). Therefore it is basically a full bearish FLY with the spot right at the top wing. Not sure yet if I want such a strong bias with the market reacting so positively to all the recent fed news.
Could you also indicate what the underlying is trading at with the above info? I like to see the difference of the butterfly body strikes and price of the underlying. Thanks.
You've got quotes? He hasn't traded it yet.
Coach, maybe quote the delta-position of the fly mentioned for those who have problems.
Yeah, short the backspread. Sure, credits are great, but no haircut in trading it as a fly.
Yeah I was kind of thinking out loud on this one because it would be 100% bearish with no wiggle room if we get a market bukkake higher on removal of doubt when Fed meeting is out. I actually looked at a few 1-3-2s with puts that had no loss on the upside with BE down to 1970 (50 points away). I will try and narrow it done and decide if maybe I wait until Fed is out of the way and see what vols do.
The 1-2-1 I suggested is short deltas since the body is 1975...
Yes ..... But it saves the hassle of looking up quotes. It's a lot easier to visualize the trade when that info is included in the post.
EDIT: My inquiry has already got optioncoach taking a closer look at the butterfly strikes due to were the underlying is trading at.
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Yes ..... But it saves the hassle of looking up quotes. It's a lot easier to visualize the trade when that info is included in the post.
EDIT: My inquiry has already got optioncoach taking a closer look at the butterfly strikes due to were the underlying is trading at.
Ha ha...I do not think I needed your question to make me look closer at a position that I am deeply reviewing for next week, after all I am the one that analyzed the position as a possible candidate
. I already knew where the quote was since the market was long closed. When I put on a FLY I of course will mention the spot as part of the trade.
EURO /6e FLY for consideration.
/6E 1.1189
/6e APR 1.09/1.12/1.15 Call FLY @ .0114
Below is risk graph for basic 1/2/1. Profit range is basically 1.10 to 1.14 so 200 pips on either side.
Due to time to expiration, if /6E hits either BE point quickly, the loss is minimal and can be gotten out of for small loss. After last Fed meeting in Jan, Euro chopped for a week before eventually trending again. Interesting play to capture some more volatile range bound trading. This would be looking for chop into fed and then some more consolidation. Major downside is 26 DTE. overall Euro could chop in a range of 1.13 - 1.10 so looking to capture that.
1.12 straddle is selling for .0235 @ 9.98% vols. Straddle BE points are about 1.1435 and 1.0965. Only slightly better than FLY BE points.
IV is implying a range of about 1.15 - 1.09 rounded in one month time. Therefore I am not too interested in the straddle price where vols have popped to 13% and price is not enough for me and risk potential move in the next 26 days and I would not sell it here. I think the FLY does cover enough of this range with smaller limited risk. I do not like being short vega here at these vol levels but I am relying on the range movement more so than a vol play.
Fly looks more attractive.
Have a limit order to fill XX FLYs @ 0.0114 so we will see.
Typing this on very little rest so forgive any errors above in the calculations.
/6E 1.1189
/6e APR 1.09/1.12/1.15 Call FLY @ .0114
Below is risk graph for basic 1/2/1. Profit range is basically 1.10 to 1.14 so 200 pips on either side.
Due to time to expiration, if /6E hits either BE point quickly, the loss is minimal and can be gotten out of for small loss. After last Fed meeting in Jan, Euro chopped for a week before eventually trending again. Interesting play to capture some more volatile range bound trading. This would be looking for chop into fed and then some more consolidation. Major downside is 26 DTE. overall Euro could chop in a range of 1.13 - 1.10 so looking to capture that.
1.12 straddle is selling for .0235 @ 9.98% vols. Straddle BE points are about 1.1435 and 1.0965. Only slightly better than FLY BE points.
IV is implying a range of about 1.15 - 1.09 rounded in one month time. Therefore I am not too interested in the straddle price where vols have popped to 13% and price is not enough for me and risk potential move in the next 26 days and I would not sell it here. I think the FLY does cover enough of this range with smaller limited risk. I do not like being short vega here at these vol levels but I am relying on the range movement more so than a vol play.
Fly looks more attractive.
Have a limit order to fill XX FLYs @ 0.0114 so we will see.
Typing this on very little rest so forgive any errors above in the calculations.
Filled X FLYS at 0.0115.
As for number of FLYs, Not really relevant, you can do this with 1, 5, or 25 FLYs if you like. Open interest is in the thousands for 6 strikes in either direction.
As for number of FLYs, Not really relevant, you can do this with 1, 5, or 25 FLYs if you like. Open interest is in the thousands for 6 strikes in either direction.