PCLN Earnings - 1080/1100/1120 Call Fly - Paper Trade

Quote from RichardRimes:

only a fly AT the money is neutral. When it is structured OTM then its also directional.

Sorry, but no. A butterfly is never "directional" because it narrowly defined profit range. Placing it OTM doesn't make it a directional position - it's still a neutral position because it will not gain or lose with the market. It has a fixed max profit and loss.

A directional position will gain as the market goes in its favor, and lose if the market goes against it and you didn't hedge. Calls and Puts are really the only "directional" positions you can take.

Quote from drownpruf:

You are so far out of your depth that it's laughable. Was the OP's fly neutral? wheeeeeeee

A butterfly is neutral regardless of whether you place it correctly or not. Was the butterfly that you placed ATM that had the stock shoot far past its wings "directional" too? No, it wasn't...but don't let me hold you up from licking windows and giggling.

Quote from Doobs789:

And out at 17.00. That's how you trade flies.

If you do it right you can set them and forget them. If you need to "tweak" it you're probably choosing a stock that is moving around too much or too little to be a viable candidate for a butterfly - and instead you should be using condors.

Quote from RichardRimes:

FX I give you a lot of credit for trying something different. I did one earnings play of FSLR..call diagnal slightly OTM which didn't go my way and ended up closing for a sm loss. The point is at least with an options play you seldom lose your max bet. Depending on the structure and how you manage your trade you can end up with a sm winner even if the trade doesn't end favorable. Granted you give up your home run when you limit your downside but the way to stay in the game long term is with the singles and doubles.

In all honesty, if you use options for more than basic calls, puts and two-strike spreads you are going to lose. Your loss may be gradual due to a perceived sense of security in that you can't lose more than your initial investment...but for this illusion of "limited risk" you are giving up time. Not only does time work against you in long options positions due to decay, but if you didn't estimate direction correctly your only real play will be limiting your max loss.
 
Quote from Safilo:

Sorry, but no. A butterfly is never "directional" because it narrowly defined profit range. Placing it OTM doesn't make it a directional position - it's still a neutral position because it will not gain or lose with the market. It has a fixed max profit and loss.

A directional position will gain as the market goes in its favor, and lose if the market goes against it and you didn't hedge. Calls and Puts are really the only "directional" positions you can take.



A butterfly is neutral regardless of whether you place it correctly or not. Was the butterfly that you placed ATM that had the stock shoot far past its wings "directional" too? No, it wasn't...but don't let me hold you up from licking windows and giggling.



If you do it right you can set them and forget them. If you need to "tweak" it you're probably choosing a stock that is moving around too much or too little to be a viable candidate for a butterfly - and instead you should be using condors.



In all honesty, if you use options for more than basic calls, puts and two-strike spreads you are going to lose. Your loss may be gradual due to a perceived sense of security in that you can't lose more than your initial investment...but for this illusion of "limited risk" you are giving up time. Not only does time work against you in long options positions due to decay, but if you didn't estimate direction correctly your only real play will be limiting your max loss.

His fly was not delta neutral; it was long. No shit, flies are bimodal to delta? Regardless, the only neutral fly is the one with spot pinned to the forward and neutrality is fleeting. It's the exception, not the norm.

An ATM call fly is long delta. An ATM put fly is short delta. The strike width is moot. So a GOOG 1000/1050/1100 fly is not a bullish position? It's somehow "not directional" to you bc it can flip delta at the body?

Don't (continue to) be a moron. This place is littered with assholes like you who picked up a book on derivatives written by ESL students who failed algebra.
 
Quote from Safilo:

Sorry, but no. A butterfly is never "directional" because it narrowly defined profit range. Placing it OTM doesn't make it a directional position - it's still a neutral position because it will not gain or lose with the market. It has a fixed max profit and loss.

A directional position will gain as the market goes in its favor, and lose if the market goes against it and you didn't hedge. Calls and Puts are really the only "directional" positions you can take.



A butterfly is neutral regardless of whether you place it correctly or not. Was the butterfly that you placed ATM that had the stock shoot far past its wings "directional" too? No, it wasn't...but don't let me hold you up from licking windows and giggling.



If you do it right you can set them and forget them. If you need to "tweak" it you're probably choosing a stock that is moving around too much or too little to be a viable candidate for a butterfly - and instead you should be using condors.



In all honesty, if you use options for more than basic calls, puts and two-strike spreads you are going to lose. Your loss may be gradual due to a perceived sense of security in that you can't lose more than your initial investment...but for this illusion of "limited risk" you are giving up time. Not only does time work against you in long options positions due to decay, but if you didn't estimate direction correctly your only real play will be limiting your max loss.

I really want to thank you for this insightful post. I'm sure we all greatly appreciate your willingness to share your extensive options trading knowledge. I know I learned a lot.
 
Quote from drownpruf:

His fly was not delta neutral; it was long. No shit, flies are bimodal to delta? Regardless, the only neutral fly is the one with spot pinned to the forward and neutrality is fleeting. It's the exception, not the norm.

You obviously don't know what being "delta neutral"...no...scratch that, you don't know what "neutral" means. Refer to the dictionary and then make some adjustments to your response.

An ATM call fly is long delta. An ATM put fly is short delta. The strike width is moot. So a GOOG 1000/1050/1100 fly is not a bullish position? It's somehow "not directional" to you bc it can flip delta at the body?

Ohh, is that what you learned by signing up for the secret newsletter at "stockTraderMaster4000.biz".

You were wrong, now you're trying to make this about delta? LOL...nah bro. Go back to being wrong and giving me your money with your directional butterfly "trades".

Don't (continue to) be a moron. This place is littered with assholes like you who picked up a book on derivatives written by ESL students who failed algebra.

If I'm a moron then why are you the one who's wrong?

Quote from Doobs789:

I really want to thank you for this insightful post. I'm sure we all greatly appreciate your willingness to share your extensive options trading knowledge. I know I learned a lot.

$17 dollars is pretty gangsta...

But not quite as gansta as coming onto a forum and calling butterfly spreads "flys" instead of "flies".

So was occupy wall st mostly people from this website who lost their money after their "EXPART BATTTESTD STRAYHAGY" wiped their account?
 
Quote from Safilo:

You obviously don't know what being "delta neutral"...no...scratch that, you don't know what "neutral" means. Refer to the dictionary and then make some adjustments to your response.



Ohh, is that what you learned by signing up for the secret newsletter at "stockTraderMaster4000.biz".

You were wrong, now you're trying to make this about delta? LOL...nah bro. Go back to being wrong and giving me your money with your directional butterfly "trades".



If I'm a moron then why are you the one who's wrong?



$17 dollars is pretty gangsta...

But not quite as gansta as coming onto a forum and calling butterfly spreads "flys" instead of "flies".

So was occupy wall st mostly people from this website who lost their money after their "EXPART BATTTESTD STRAYHAGY" wiped their account?

You can't possibly be this stupid. You've gotta be joking.
 
Quote from Safilo:

Sorry, but no. A butterfly is never "directional" because it narrowly defined profit range. Placing it OTM doesn't make it a directional position - it's still a neutral position because it will not gain or lose with the market.

A butterfly is neutral regardless of whether you place it correctly or not. Was the butterfly that you placed ATM that had the stock shoot far past its wings "directional" too? No, it wasn't...but don't let me hold you up from licking windows and giggling.



If you do it right you can set them and forget them. If you need to "tweak" it you're probably choosing a stock that is moving around too much or too little to be a viable candidate for a butterfly - and instead you should be using condors.


ok numbnuts, what exposure was "neutral" on the OP's PCLN fly?
 
Quote from Safilo:

A butterfly is never "directional" because it narrowly defined profit range. Placing it OTM doesn't make it a directional position - it's still a neutral position because it will not gain or lose with the market. It has a fixed max profit and loss.
Let's take an example - SPX Nov13 1250/1500/1750 put fly. Yeah, that's neutral all right. Some people should think before they start posting shit...
 
Quote from Safilo:

A butterfly isn't a binary wager because you have a range within two breakeven points where the price must exceed so that you can earn full profit.

If the stock closes beyond either your high or low breakeven points you'll earn a limited profit, while if it closes at or near the middle strike you will sustain a loss.

A binary wager is either-or, meaning it would hit a specific price or not, and if it does you get your full profit. With a butterfly you won't get full profit unless the stock passes your b/e points by a good margin (or stays as close to the midpoint between them if you're doing a short butterfly).

Curious...then Your definition of a fly is -1 +2 -1 ?

Most traders "buy" a fly which is what you call short +1 -2 + 1. Which is also referred to as binary in that you DON 'T want to hit the edges you want to land in the middle.....
What we may be having here is a failure to communicate.

And by directional I simply mean bullish or bearish ...
 
Quote from drownpruf:

ok numbnuts, what exposure was "neutral" on the OP's PCLN fly?

We went over this already. We're talking about the position itself, which in this case was a butterfly spread - a neutral position with a defined profit and loss.

Quote from sle:

Let's take an example - SPX Nov13 1250/1500/1750 put fly. Yeah, that's neutral all right. Some people should think before they start posting shit...

Confusing position with placement of said position, are we?

You should think before posting shit, I agree.

Quote from RichardRimes:

Curious...then Your definition of a fly is -1 +2 -1 ?

If he thought the stock was going to go up, he should have just did a bull spread. There is really no reason to use a butterfly OTM.
 
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