Destriero - Butterfly Trades

[ironchef]

.sigma said it, albeit in a rather funny manner. Look up "Derman delta"; the paper isn't very long or complicated.

...at least on the surface. Getting sticky delta and how it applies in different situations is a horse of a different color.

Thank you. I haven't read it yet but will.

OK, @.sigma, if I know it is sticky delta, do I trade 132 rather than 121 or vice versa?

 

[ironchef]

Never mind I should be able to work it out.

 

[taowave]

Chef,it doesn't seem like you intuitively understand the subtle differences,and part of it is that you haven't traded a ton of them

Alot of this is a feel one develops as well as an ability to spot a relative mispricing.

Looking at the 100/105/110 fly vs the 100/110/122.5. 1x3x2,what factors would you take into considerstion??

Sims are great,but you wont learm how to trade...imho

Never mind I should be able to work it out.

 

[BlueWaterSailor]

Chef,it doesn't seem like you intuitively understand the subtle differences,and part of it is that you haven't traded a ton of them

Yah. That's a solid truth. And you just might find out you're not suited to it. In fact, that's really the only way to find out.

I came in thinking trading was just (or mostly) a matter of being smart and being able to learn quickly; these days, I think of it more like fine carpentry. Sure, there are lots of fairly complicated things to learn - but they're not the thing itself; that's just the basic requirement, the time and effort that you pay so you can get to practicing the skill of trading.

Alot of this is a feel one develops as well as an ability to spot a relative mispricing.

That's much along the same lines. You can be a pretty good commercial artist and make a steady paycheck if you learn the techniques well. But you're not going to become Michelangelo no matter how well you learn; past that basic level, you have to be, or at least have the capacity to develop into, something more than the ordinary.

 

[deltaf0rce]

What distinguishes "fuck it" money from piker freedom is not choosing index verts over singles. It's structuring the best position for your outlook over time and covering when the juice is squeezed or you're wrong. In index vol it requires some understanding of smile dynamics and stickiness which bleeds into SN-vol as well.

Knowing when to hedge in D1 over vol and vice versa. When to add duration (vega) over gamma.

Any good swing (low-freq) speculator can/will do better in vol if they can get to the aforementioned experience/knowledge.

10000%

 

[deltaf0rce]

What distinguishes "fuck it" money from piker freedom is not choosing index verts over singles. It's structuring the best position for your outlook over time and covering when the juice is squeezed or you're wrong. In index vol it requires some understanding of smile dynamics and stickiness which bleeds into SN-vol as well.

Knowing when to hedge in D1 over vol and vice versa. When to add duration (vega) over gamma.

Any good swing (low-freq) speculator can/will do better in vol if they can get to the aforementioned experience/knowledge.

I’m not at your level but when realizing that vol was an extra profit opportunity to be made on an overnight position, it almost feels like you’re leaving money on the table by not embracing vol.

 

[ironchef]

Chef,it doesn't seem like you intuitively understand the subtle differences,and part of it is that you haven't traded a ton of them

Took me 3-4 years, countless hours reading, analyzing and went to school (Coursera) to figure out basic 121 butterfly set up. I hope it won't take another 4 years to understand the subtle differences between 121 and 132.

Yah. That's a solid truth. And you just might find out you're not suited to it. In fact, that's really the only way to find out.

That is a distinct possibility.

So far I completed 12 butterflies. Set up 5 new 121 on Friday. I will know soon enough.

That's much along the same lines. You can be a pretty good commercial artist and make a steady paycheck if you learn the techniques well. But you're not going to become Michelangelo no matter how well you learn; past that basic level, you have to be, or at least have the capacity to develop into, something more than the ordinary.

I am no Michelangelo, don't want to be one, only want to learn how to painting, as an amateur.

 

[taowave]

If you understand verticals,it should be relatively smooth sailing

Took me 3-4 years, countless hours reading, analyzing and went to school (Coursera) to figure out basic 121 butterfly set up. I hope it won't take another 4 years to understand the subtle differences between 121 and 132.



That is a distinct possibility.

So far I completed 12 butterflies. Set up 5 new 121 on Friday. I will know soon enough.

I am no Michelangelo, don't want to be one, only want to learn how to painting, as an amateur.

 

[caroy]

If you understand verticals,it should be relatively smooth sailing

1:3:2 i believe is the same as a broken wing or skip wing.

 

[caroy]

1:3:2 i believe is the same as a broken wing or skip wing.

I like the 2:3:1 on high IV longer term 30 DTE plus. You can then sell a vertical against it and turn it into balanced 2:4:2. My thinking at the moment.