help with my butterfly

At this time the TOS backtester is not linked to the analysis page. You can backtest numbers -- profit and loss -- but cannot see the analysis as you can with optionvue.
 
Quote from cdowis:

At this time the TOS backtester is not linked to the analysis page. You can backtest numbers -- profit and loss -- but cannot see the analysis as you can with optionvue.
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If you are looking to see if an entry would have been profitable or not, profit and loss is more than enough for backtesting. For many strategies I do not need to see the greeks on a given day as I can see how the position is reacting. Sure it is useful to have but not truly necessary to backtest positions. For free the tool is more than enough to test not only strategies but you can use to do combinations of different stocks or indexes together.

I think for the price it is pretty useful.
 
Quote from Allspread:

You really should sign up for a brokerage account with thinkorswim. You can papertrade, live trade, and analyze anything you could possibly think of regarding options.

On a calendar or time spread, the sold front month option is sold by you at less than the value of the back month option you purchase.

This means you pay for the calendar to open it because the premium received for selling the front month option is lower than the amount you had to pay to buy the back month as a hedge, but you don't "lose" that money spent.

Your profit/loss is essentially zero at that moment. Without taking commissions into account, if the prices didn't change in the next minute and you re-sold/re-bought the options to clear out your position you would re-receive the same amount of $ you originally spent or something very close to it (due to bid/ask differences).

Your profit is derived from the value of the front month option declining faster than the back month.

Example of one of my recent calendar positions (commissions are not included):

On 4/23, I opened a calendar position on LMT:

I sold a 105 May call for $3.10.
I bought a 105 June call for $4.30.

I had to pay $1.20 difference to open the position.

On 5/8 to close the position:

Sold the June 105 call for $3.30
Bought the May 105 call for $1.68.

The math:

May sold @$3.10, bought at $1.68 = +$1.42
June bought at $4.30, sold at $3.30 = -$1.00

Profit = $0.42.
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I see. So you bought the option back to close it, as opposed to letting it expire?
 
Quote from jonbig04:

I see. So you bought the option back to close it, as opposed to letting it expire?
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You can wait for it to expire, but if you made 33% in 2 weeks, you don't let that get away.


;-)
 
Quote from Tums:

You can wait for it to expire, but if you made 33% in 2 weeks, you don't let that get away.

;-)
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Yeah -- that's correct.

Because if you try to carry the front month all the way to expiration, you run into the risk that those unrealized profits that were already available to be taken -- as I did with a 30%+ gain in 2 weeks -- could get away from you if the underlying price runs away from your option strikes.

I use 20% as my profit target on the calendar. If it gets past that and I think it's going to stay around the strike price, I'll let it go a little more. If I'm past 20% and it starts to look like I'm going to lose some of the profit, I pull the trade off and take what I can get. An alternative is when the profit reaches 20%, then think about pulling the position and taking your $ if it dips back to 15%. Best to take the $ available rather than hope you'll get more later. Hope is a lousy strategy :)

Also consider that volatilities on the front month can get crazy in the week of expiration on the front month, meaning buying back your short on the position could get expensive depending on how the trade went.
 
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