By 7.50 wide butterfly, do you mean the September 45/52.5/60 butterfly? I see that going for 2.55 on thinkorswim. Or do you mean the August? The August fly is going close to 3.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
PCLN straddle
- Thread starter johnshepherd59
- Start date
Quote from atticus:
Straddled ATM flies. NTES at 54+. Go long the 55/60/65 call fly and the 45/50/55 put fly in Sep for roughly $1 each. Not a reco and there are some problems inherent. Max $5 gain on $2 debit. Can invert delta or trade through the wing in the direction of the move.
Pay 3.00 all-in for the 7.50 wide flies. Lower prob of inverting on the direction of the move and the same R/R potential.
I see a max payout of $3 at expiry, given a $2 debit.
Quote from cdcaveman:
the biggest thing here is.. how can you really consider the butterflys max payout when that rarely occurs... another way to delusion yourself.. just my thoughts..
Exactly! 'Fly's max payout is a myth and should not be taken into consideration. However, a wide IB may be a viable strategy if the target profit is in the 10-20% range of the max risk.
E.g. SPY Sep 135/140/145 iron butterfly may be established for 3.66 credit. The risk is 1.34. Once SPY moves down to 139 or stays at 140 within next week or two, the spread can be closed for 3.40 or so. That's .26 profit per 1.34 risked or ~20%. The question is how much can one lose (besides full loss) and what is the appropriate position size.
Quote from cdcaveman:
See someone agrees with me... market isn't moving at all.... short premiumon the near term
Vol is real cheap here. I probably wouldn't sell premium now, as vol may tick up from here next week.
On the other hand, you said that you are buying a straddle, so I guess you want to be long vol.