selling a butterlfy

[Philo Judeaus]

When it is obvious that the underlying stock is going to go up, you could buy back the short In The Money (ITM) call options to maximize profits, essentially transforming the position into a Bull Call Spread with an additional call option on it. And vice versa on a down-move.

 

[met1989]

Well yea its cheaper because the short butterfly is a capped long straddle, but is the magnitude of the move you need really that much different? With the additional short wings moving the break-evens does it warrant it? To me theres just way better options to utilize than a short fly, also since long flies have the best R:R, short flies have the worst R:R.

What’s R:R?

 

[El OchoCinco]

Cause what happens if I’m a week to expiry and it’s not moving out of the money so I need to adjust or thinking of it now I will sell

When you open a position and end up being wrong and positions starts losing money, here is what you do.

lean in so I can whisper it in your ear...




CLOSE THE FUCKING POSITION!

 

[tommcginnis]

What’s R:R?

Depends on position.

 

[ironchef]

I'm curious though... does anyone here trade short butterflies? I've only traded long flies and never personally have seen others trade them short (long body/short wings)

Your counter parties?