There's a longer answer, but the driver's side of the steam roller is probably more like catching a train. And if I understand correctly, you only catch the train 35% of the time. If you have a schedule (good info, and good analysis skills) you may only catch the train 55% of the time. Both styles seem to have pros and cons
How to pick up pennies in front of the /ES steam roller - 2020
- Thread starter drcruz
- Start date
No worries.
I am a HUGE fan of FLYs as well as BWB so best of luck. Using the TOS analyzer I manipulate them often to find the best profit range and to highlight breakeven points as well as play with changes in volatility.
BWBs are good for neutral to directional bias and often can be closed for a profit well before expiration, in my case I often used 20-45 days to expiration on average and look for favorable vol situations.
In ToS, your sim account number is the same as your regular account number. When you log in you, you just flick a switch to enter into a sim acocunt to test things and use the analyzer and even place trades using live pricing.
I think the title of the thread is a mislablel because the good Dr. is NOT picking up pennies in front of a steamroller with naked options. Broken Wing Butterflies are limited risk positions like regular butterflies, just that one side is off balanced. You can play with the strikes to get a nice body profit zone with a bias and then a risk free side if market runs in that direction.
Vols impact FLY pricing inversely. If vols move higher the FLY pricing drops and if vols settle, the FLY increases in value. So I personally have done BWB on higher vol positions because option premiums are higher allowing me to get more from the body while I push one of the wings far out.
If you look at a typical BWB position you can have no loss on the downside, a body range around the market and then increasing risk as market moves higher past your upper BE point. That is often where I cut out and closed the position or adjusted to cut my losses or move on.
Unlike OP I like these with theta so I do under 45 days to expiration.
If a BWB is a split strike fly,you are simply short a vertical.Im guessing your risk reward is 1 to 1,5 point long a 5 point vertical + short a 10 point vertical,same short strike
Hey there Ocho,
I dont think you are 100 percent correct in your statement regarding vol impact on Butterflys..
Intuitively, when you have butterflys that are far out if the money,it would make sense that you would need a pop in vol to have them increase in value as higher vol would imply a gretater likelyhood of possibly getting there..makes sense??
Obviously if you are long the ATM Bfly,you would like the vol to go as low as possible so the likelyhood of the stock glued to the short strike increases..
Compare ATM flys vs way OTM and you will see what i mean
I dont think you are 100 percent correct in your statement regarding vol impact on Butterflys..
Intuitively, when you have butterflys that are far out if the money,it would make sense that you would need a pop in vol to have them increase in value as higher vol would imply a gretater likelyhood of possibly getting there..makes sense??
Obviously if you are long the ATM Bfly,you would like the vol to go as low as possible so the likelyhood of the stock glued to the short strike increases..
Compare ATM flys vs way OTM and you will see what i mean
i agree with you