Charles Cottle baby butterflies

[emulimu]

I paid lot of money and bought his stuff but it's way over my head. It's collecting dust since a few years. Hoping someone can explain with a simple example of how an iron condor has baby butterflies when you dissect it. Thanks in advance.

 

[ETJ]

Brilliant guy.

 

[Philo Judeaus]

No such thing as a baby butterfly... that would be called a caterpillar

 

[minmike]

Works same with options but easier to see in eurodollar futures.

M9. 1
Z9. -2
M0 1

Same as long 1 m9u9z9, long 2 u9z9h0 long 1 z9h0m0 flys.

Sorry if this is jumbled. Best way to see is play around in excel with different combos. See how they combine to make others.

 

[MKTrader]

Brilliant guy.

Maybe. But how many of these "brilliant" option teachers have actually made a good living from their trading over the last few decades? You'd think they'd do well if their "high-probability, very limited risk" trades worked out like they said.

 

[guru]

Here is basic example:
Let’s say you buy the following 2 butterflies:
1x$100C/-2x105C/1x110C
and
1x$105C/-2x110C/1x115C

You should see that the 2nd butterfly bought one of the calls that was sold in the 1st butterfly (105C), while selling two calls bought in the 1st butterfly (110C).
Now when you look at how many calls you ended up with, you’ll see you have an iron condor:
1x100C/-1x105C/-1x110C/1x115C

 

[jamesbp]

I paid lot of money and bought his stuff but it's way over my head. It's collecting dust since a few years. Hoping someone can explain with a simple example of how an iron condor has baby butterflies when you dissect it. Thanks in advance.

The primary purpose of dissecting your position is to identify any particular elements of the position that may be too expensive to be long ( to be sold ) or too cheap to be short ( to be bought )

You can see your condor as
... a series of overlapping flies
... a pair of vertical spreads
... a long strangle v short strangle

In addition when I am looking at a Fly, I am looking at
... Call 1x2 + outright call ( at the higher strike wing )
... Put 1x2 + outright put ( at the lower strike wing )
... straddle ( at the body ) v strangle ( in the wings )

If I was looking to sell the Fly and either / both of the wings has negligible extrinsic value
... then I would just trade the 1x2 or straddle

Cheers
James

 

[Giddiyup]

I paid lot of money and bought his stuff but it's way over my head. It's collecting dust since a few years. Hoping someone can explain with a simple example of how an iron condor has baby butterflies when you dissect it. Thanks in advance.

Youngot

Maybe. But how many of these "brilliant" option teachers have actually made a good living from their trading over the last few decades? You'd think they'd do well if their "high-probability, very limited risk" trades worked out like they said.

Probably approaching zero.

 

[tommcginnis]

... you have an iron condor...

It's either a call condor or a put condor; an iron condor (term used by the OP) is calls + puts.

 

[ETJ]

"Maybe. But how many of these "brilliant" option teachers have actually made a good living from their trading over the last few decades? You'd think they'd do well if their "high-probability, very limited risk" trades worked out like they said."

Charlie did very well trading, publishing and trading.