Destriero - Butterfly Trades

taowave said:
Why the distinction between directional vs neutral???

Neutral is a direction ...

Or why not go with neutral if that is where the edge is and simply adjust your Delta with "Shtock", cheap verts or whatever floats your boat??
More...

Good point. I certainly have the available margin as I usually trade conservatively. A high theta capture strategy combined with small outright position, even with undefined overnight risk, should still be acceptable. I supposed I’m attracted to the asymmetric payoffs on profitable trades versus losing trades with OTM ‘flies, where I typically risk 30% of debit in exchange for a potential 100 to 200% return if price moves in my direction.

Limited risk with high leverage is highly attractive to someone who still believes they can predict short term price moves. Time for some calculations...
 
FWIW, I tend to trade in a very similar manner to you
( asymmetric bets),but have been shifting towards more neutral positions with higher theoretical edge and taking a moderate Delta stock..Jury is still out :)

BeautifulStranger said:
Good point. I certainly have the available margin as I usually trade conservatively. A high theta capture strategy combined with small outright position, even with undefined overnight risk, should still be acceptable. I supposed I’m attracted to the asymmetric payoffs on profitable trades versus losing trades with OTM ‘flies, where I typically risk 30% of debit in exchange for a potential 100 to 200% return if price moves in my direction.

Limited risk with high leverage is highly attractive to someone who still believes they can predict short term price moves. Time for some calculations...
More...
BeautifulStranger said:
Good point. I certainly have the available margin as I usually trade conservatively. A high theta capture strategy combined with small outright position, even with undefined overnight risk, should still be acceptable. I supposed I’m attracted to the asymmetric payoffs on profitable trades versus losing trades with OTM ‘flies, where I typically risk 30% of debit in exchange for a potential 100 to 200% return if price moves in my direction.

Limited risk with high leverage is highly attractive to someone who still believes they can predict short term price moves. Time for some calculations...
More...
 
taowave said:
FWIW, I tend to trade in a very similar manner to you
( asymmetric bets),but have been shifting towards more neutral positions with higher theoretical edge and taking a moderate Delta stock..Jury is still out :)
More...

Yes, my theta costs are high on the legs of my ‘flies as their deltas either move away from 0 or 100. Of course, the body is intended to “Pay for” the legs for at least the first few days. Also, positive gamma can be a beautiful thing as intimated below.

Another idea would be to combine a wide winged iron condor for higher theoretical edge and an OTM ‘fly instead of a naked moderate position in the underlying for directional exposure. After all, the deltas can grow with the directional ‘fly with favorable movement of the underlying and as time passes, whereas the delta on the underlying remains fixed.

I suppose the simplest way for a non math whiz to compare each structure is to take selected price points of the underlying and multiply the payoffs versus the probability of that point being reached. This should give one a rough idea of the relative merits of each position type.

To the maths, with me!
 
TrailerParkTed said:
Did Covid change your plans for attending the Inauguration? If your still going please be safe, I know you could smack down any sock puppet but there are some bitter ass looney tunes so again, please be safe Sensei!
More...


The GOP Insurrection altered my plans. I canceled my trip last week.



2021-01-20_13-02-20.png
 
You must log in or register to reply here.
Back
Top