From $1000 to ? Trading SPX Weeklys in my Roth

Trade Theory said:
Quick, call Jerome Powell, the market is down!

Trade 6:

tIP BOT +1 BUTTERFLY SPX 100 (Weeklys) 31 JAN 20 3290/3265/3240 PUT @1.75 CBOE
View attachment 217611

Taking a bearish shot this week. The markets rallied 17% since October and is in a fragile place. In my humble opinion, the Coronavirus is the catalyst the bears are looking for. I wouldn't expect any type of real correction but I'm positioning for a small pull back toward the 20 or 50 day moving averages.

Put spreads on the SPX price much better than the call spreads due to the implied volatility skew. I was able to get a 25 point spread for 1.75, which is roughly the same as what a 15 point call fly would price for. Inherently, you're getting more bank for your buck if you're right. Downside is you have vol working against you when it starts going ITM. I manage the bear butterflies significantly different from the call flies. If the sell side progresses into next week, I'll likely tighten the legs of the fly to take out my risk and leave on a lottery ticket. It only takes one nice hit to double this account.
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this fly is up to 2.55

very nice!
 
Trade Theory said:
We're on track to close this week significantly outside of where the implied vol was pricing us to go. That's the first time this has happened since August 2019. I'm not feeling good about placing the same trade on the SPX again this next week unless the market pulls back to around 3300 before today's close. I'll likely skip the trade and do some earnings plays this week on INTC, PG, AAL, ETFC and/or TXN instead.
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this is great analysis right here.

you noticed the vol range expanded and volume is being pumped in especially today on a Friday. The August 2019 comment widened my eyes tho. This is a specialty move maybe. We could see a significant range bound market at least.

loook at the vol being pumped into the vol etn/etf matrixes
 
@Trade Theory You're awesome! Thanks for sharing the knowledge.

So far, I've seen your butterfly and spread vertical trades, I would love to now see how you trade Iron Condors.

I'd greatly appreciate a brief summary of the strengths/weaknesses/applicability of each:

Butterflys - Under what market conditions/trading goal best to use?
Verticals - Under what market conditions/trading goal best to use?
Iron Condors - Under what market conditions/trading goal best to use?
 
anycolour said:
@Trade Theory You're awesome! Thanks for sharing the knowledge.

So far, I've seen your butterfly and spread vertical trades, I would love to now see how you trade Iron Condors.

I'd greatly appreciate a brief summary of the strengths/weaknesses/applicability of each:

Butterflys - Under what market conditions/trading goal best to use?
Verticals - Under what market conditions/trading goal best to use?
Iron Condors - Under what market conditions/trading goal best to use?
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dude why would he trade condors if the flys work?

and there’s many books and other discussions on thus forum about the right conditions to trade different wing spreads.

please let’s keep this discussion on butter-fly spreads
 
He said he would trade Butterflys, Condors, and Verticals in this thread. So far I've only seen flys and verticals here. It would be nice for a noob to see how TradeTheory trades Condors. I want to see how he does it. Not someone else. But thanks for the suggestion.
 
anycolour said:
He said he would trade Butterflys, Condors, and Verticals in this thread. So far I've only seen flys and verticals here. It would be nice for a noob to see how TradeTheory trades Condors. I want to see how he does it. Not someone else. But thanks for the suggestion.
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My mistake, for some reason I thought he was only trading fly's.
 
anycolour said:
He said he would trade Butterflys, Condors, and Verticals in this thread. So far I've only seen flys and verticals here. It would be nice for a noob to see how TradeTheory trades Condors. I want to see how he does it. Not someone else. But thanks for the suggestion.
More...
.sigma said:
dude why would he trade condors if the flys work?

and there’s many books and other discussions on thus forum about the right conditions to trade different wing spreads.

please let’s keep this discussion on butter-fly spreads
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I agree that the driver should choose the road, not the passenger. Imagine having a passenger sitting next to you and yapping that you should take a different road because he wants to learn or see something.
I want to learn too, and I do this by observing, not directing.
 
anycolour said:
@Trade Theory You're awesome! Thanks for sharing the knowledge.

So far, I've seen your butterfly and spread vertical trades, I would love to now see how you trade Iron Condors.

I'd greatly appreciate a brief summary of the strengths/weaknesses/applicability of each:

Butterflys - Under what market conditions/trading goal best to use?
Verticals - Under what market conditions/trading goal best to use?
Iron Condors - Under what market conditions/trading goal best to use?
More...

I saw this question over the weekend but I wanted to wait until today to answer because I figured I might be trading a condor today. I don't trade them as opening trades, rather an adjustment to an existing trade. I'm a bit mixed on the effectiveness of this trade as it seems like more often than not if I didn't make the adjustment I would have been better off. But the whole point is to reduce my risk while still staying in the trade to allow the butterfly time to mature. The butterfly spread matures over time and will only be worth close to its intrinsic value at 1-2 DTE.

My original butterfly was +1 3290 PUT / -2 3265 PUT / +1 3240 PUT for $175. Today's open SPX gapped down to about 3250, putting my butterfly ITM. I could either close the whole trade as a small winner for around $450 ($280 profit), or I could narrow the legs of the fly for a smaller profit, yet still leaving a portion of the trade on to mature. I rolled the 3290 put (which was deep itm at this point) down to 3280, and to keep the other side of the fly balanced I rolled the 3240 put up to 3250. I did this for a $235 credit taking my entire $175 risk off the table and even profiting a bit on top of that. So at this point I've realized a $60 profit and still have a 15 point wide fly completely paid for. Worst case scenario in this trade is I make $60 and the remaining legs of my fly expire worthless.

Trade 6.5 (adjustment):
tIP SOLD -1 CONDOR SPX 100 (Weeklys) 31 JAN 20 3290/3280/3250/3240 PUT @2.35 CBOE
006 Adjustment.PNG


The risk profile really helps me understand where I am with the trade, so when I combine the original trade and the adjustment, it looks like this. What would be ideal for this trade is if the market slowly moves back up to around 3265 on expiration.

SPX Adjustment.PNG
 
Damn, my pea brain is having a hard time understanding this one. Seems significantly more complicated than everything else you've shown so far. I'll get some sleep and hopefully I'll understand a little better tomorrow.

Thanks for sharing!
 
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