Long Iron Butterfly, Long Iron Condor, Wrangles and their Synthetics: Risk, Reward, G

C

CPTrader

I have noticed many options traders and options trading book authors use different notations for different strategies and their synthetics and also indiscrimantely (or so it appears, refer to strategies as being short or long). This can be very confusing. what is even more bothersome, is that at times, it seems to me that it is not just a question of mixing up notations, but simply being wrong.

For example, I recently saw a long iron butterfly described as the synthetic combination of a "Short Bull Put Spread" and a "Short Bear Call Spread". Is that not wrong??

I thought that synthetic combination was a SHORT iron CONDOR, not a long iron butterfly? Am I wrong?

Also I believe that a SHORT iron condor is also a synthetic short strangle and a long strangle combined together. Correct? What other synthetic versions of the SHORT/long iron condor or the SHORT/long iron butterfly are you aware of?

Finally, I would love for others to share their opinions on the risk and reward of SHORT/long iron condors and butterflies, wrangles ( a strategy hardly ever discussed), plain butterflies, condors , their peculiarities, when best to be used, what to be careful of and how they view these strategies from a synthetic decomposition perspective.

Any other thoughts on these strategies in this thread would also be appreciated. Thank You.
 
Quote from abogdan:

I'm sure you are familiar with this book http://www.riskdoctor.com/pages/3/index.htm

I consider it as being the best for type of questions you just asked
Cheers,
More...

I have the Cottle book and consider it to be a great book. However his notations are not consistent with many others. I don't say this to criticize him as he is rather detailed and precise (and explains the differences in notations)and I cherish his book.

He does not go into much detail on iron condors and butterflies though and by my recollection does not even discuss wrangles. It seems only the Baird book covered wrangles.
 
Quote from CPTrader:

I have the Cottle book and consider it to be a great book. However his notations are not consistent with many others. I don't say this to criticize him as he is rather detailed and precise (and explains the differences in notations)and I cherish his book.

He does not go into much detail on iron condors and butterflies though and by my recollection does not even discuss wrangles. It seems only the Baird book covered wrangles.
More...

I have Baird's book in my library as well, but I like the Cottle's book better not because its definitions (after all its just a meronomy) but because it gives you the solid formulas to dissect any synthetics regardless of what they are called. I don't like the words manipulation (I have my own names for the most synthetics anyway). That is why I like math the best: its precision models regardless of the symbols these models use is the thing.
Taxonomy, not meronomy, is the key.
http://www.eng.umu.se/personal/morgan/_private/Summary of Cruse MiL.pdf
Cheers,
 
Quote from abogdan:

I have Baird's book in my library as well, but I like the Cottle's book better not because its definitions (after all its just a meronomy) but because it gives you the solid formulas to dissect any synthetics regardless of what they are called. I don't like the words manipulation (I have my own names for the most synthetics anyway). That is why I like math the best: its precision models regardless of the symbols these models use is the thing.
Taxonomy, not meronomy, is the key.
http://www.eng.umu.se/personal/morgan/_private/Summary of Cruse MiL.pdf
Cheers,
More...

Oh I fully concur - Cottle is a better book - he gives you the fundamentals, he teaches you how to understand the logic and then throws in real trader lore... fully great book.

Thanks for the link to his new book. I had downloaded it but had not read it. On your prompting, I got some more information from the new book. The treatment on wingspreads seems better in the CWS book.

Where are riskarb and Mav... I'm looking forward to hearing their wisdom and trader lore on these topics/wingspreads.
 
Quote from CPTrader:

Oh I fully concur - Cottle is a better book - he gives you the fundamentals, he teaches you how to understand the logic and then throws in real trader lore... fully great book.

Thanks fo rthe link to his new book. I had downloaded it but ha n ot read it. On your prompting, I got some more information from the new book. The treatment on wingspreads seems better in the CWS book.

Where are riskarb and Mav... I'm looking forward to heairng their wisdom and trader lore on these topics/wingspreads.
More...

I totally trust Maverick. Guys like him are so rare on ET. I read every post he sends.
 
Quote from Hello_Dollars:

I had intended to share what I know about wingspreads. However, the sycophancy on this thread is rather sickening. Hence, I'll pass.
More...

Ah come on... what spycophancy, we praise authors who we've learnt from and you call that sycophancy. Relax and share what you knwo... Ill only thank you, I won't praise you, so you don't accuse me of being a sycophant!
 
You must log in or register to reply here.
Back
Top