dual otm flies?

[newguy05]

Quote from atticus:

Downside long calendar, upside fly. If you're intent on holding to expiration it won't matter, but if you're looking for a touch, then go with the down n out calendar and up n out fly instead of dual flies.

that makes sense because calendar is long vega while flies are short. So usually the iv moves in your favor (increase iv when underly is falling and lower iv when rallies). thx

 

[newguy05]

Quote from tomk96:

why not just go long the straddle?

because straddle cost a lot more to buy and you are 100% against theta. It makes sense if you expect a massive move in either direction and/or iv explosion but not when you expect some smaller/gradual move in either direction.

One you need to be precise and pin to a strike as a result priced cheaper accordingly, another is free form hoping the underly moves enough to offset theta or a play on iv, and it's much more expensive to buy.

I am still practicing timing the exit on the flies and when to have how many strikes between the legs. Quite a bit of decisions to be made for every butterfly trades.

 

[tomk96]

Quote from newguy05:

because straddle cost a lot more to buy and you are 100% against theta. It makes sense if you expect a massive move in either direction and/or iv explosion but not when you expect some smaller/gradual move in either direction.

One you need to be precise and pin to a strike as a result priced cheaper accordingly, another is free form hoping the underly moves enough to offset theta or a play on iv, and it's much more expensive to buy.

I am still practicing timing the exit on the flies and when to have how many strikes between the legs. Quite a bit of decisions to be made for every butterfly trades.

your flies are so tight, it's like a shot in the dark. granted i don't know how much you want to risk, but you may want to try some wider flies. or even skew the strikes.