Destriero - Butterfly Trades
- Thread starter ironchef
- Start date
By the way, NVDA fly was a big loser.
I’m trying to understand this post.
Chef, did you open these flies ATM? Reason I ask is because you said “used forecast direction for belly/body placement”, thus I’m assuming the body is slightly OTM or even further out.. but then you say 1 SD wide? 1 SD wide from ATM? or 1 SD from where you sold the abdomen?
also I’m a bit surprised by your results. Your forecast ability is definitely in the upper percentile if 19 of your 30 flies were profitable. Just imagine if you managed these flies instead? Your 63% would easily be =>70%, and imagine if you started accounting for skew/kurtosis and broke some wings, skipped some strikes, and ratio’ed some contracts? That 70% turns to 80%. Of course hit rate ≠ profits but still, pinning flies or damn-near pinning flies is an extremely difficult task.
did you manage losers? Or let them expire worthless?
1 SD from belly.
Fooled by randomness. Or fooled by a raging bull market.
Tried to manage losers in the beginning but gave up and let it played out. If profit target was not met, let it expired. In those cases many expired with a profit.
1 SD from belly.
Fooled by randomness. Or fooled by a raging bull market.
Tried to manage losers in the beginning but gave up and let it played out. If profit target was not met, let it expired. In those cases many expired with a profit.
Where was the belly placed tho? Are you saying since it’s a bull market you places the belly slightly above ATM? I’m confused Chef lol
@.sigma, what you said is too technical for me to understand. I am very simple minded: If there is an up bias in price, then statistically, placing the belly above ATM has a better chance of being correct vs ATM???
If not, then I was fooled by randomness, after all 30 is a very small sample size.
If not, then I was fooled by randomness, after all 30 is a very small sample size.
On second thought it cannot be that simple or everyone would be printing money. My counter parties cannot be that stupid.
So it must be randomness, if I continue to trade, it would eventually even out to zero.
stop frontin, you understand me lol
bull markets don’t go straight up like a vector, they ebb and flow.. correction then propulsion.
thus, there’s volatility on the way up, just as there is the way down.
You mentioned your flies success could be due to this bull market, I replied saying how? You aren’t long stock, you’re spreading your risk.
now you just mentioned you placed the body strike slightly higher than ATM now that gives a better picture, and makes your bull market success statement a bit clearer.
To answer your question, yeah if the trend is up placing the body above ATM is ideal, although of course nothing for certain.
For example, I was neutral/bearish coming into 4/19 week.
I placed 12 flies in single names and ETF’s.
most of the flies were opened ATM, or slightly lower than ATM.
9 of the 12 were profitable.
2 of the 3 losses were profitable all week, and on expiration day spot moved a bit away from the bodies rendering them small losses.
of course the overall direction of the market will have a huge affect on your single name flies, thus why it’s important to predict/bias the SPY, QQQ, IWM, DIA, firstly... then dig into the single names
I placed 12 flies in single names and ETF’s.
most of the flies were opened ATM, or slightly lower than ATM.
9 of the 12 were profitable.
2 of the 3 losses were profitable all week, and on expiration day spot moved a bit away from the bodies rendering them small losses.
of course the overall direction of the market will have a huge affect on your single name flies, thus why it’s important to predict/bias the SPY, QQQ, IWM, DIA, firstly... then dig into the single names