The staggered butterflies

Corto

Corto

Following advice from the big guys in this forum I took a dive and tried to find the hidden wisdom in the good old butterfly threads.

Now the question I have may prove I have nothing learned, but I will go ahead and ask and will appreciate feedback. Thank you.

In this thread from last year
https://www.elitetrader.com/et/threads/pricing-butterfly-spreads.323503/#post-4700016
Destriero posted this screen shot. While dissecting it I first thought: wow, great idea to have them staggered like that and then I noticed the two 10AUG flies make a condor. Same about the 20AUG ones.

So the question is why? Maybe to manage each individually based on market movement?
Screen shot.png
 
I do not know the answer but Charles Cottle in his book “Options trading: the hidden realty” talked about harvesting baby butterflies embedded in the original spread. Here is a YouTube link
 
My question is simply why place two butterflies (8 legs total) when a condor with appropriate strikes will have the same profit diagram and involves 4 legs only. What am I missing here?
Hope destriero will chime in.
 
Corto said:
My question is simply why place two butterflies (8 legs total) when a condor with appropriate strikes will have the same profit diagram and involves 4 legs only. What am I missing here?
Hope destriero will chime in.
More...

I trade these as well. My knowledge of the greeks and intricacies of the modeling of these positions is on a caveman level compared to des, so we'll wait for him on that front.

In a market like we have today - relatively calm - these spreads can give you a good bit of exposure and profit range for a modest outlay. The staggering can occur as a repair strategy or to enhance the position, but it isn't always necessary. If you have a 1/2/1 or a 1/3/2, it sometimes makes sense to establish another by buying one of the shorts as the "1" in a new spread heading the same direction with the same ratio.
 
There must be something about the staggering, otherwise why pay commissions for 8 legs (4 per fly) instead of 4 for the condor? On the other hand, given the volume some people trade, the commissions they enjoy may not even come as a decision factor.
 
We can't see from that screenshot when the flies were entered. My guess is he entered 1 fly, then another when market conditions changed. The result is a condor but he essentially legged into it when price action dictated.
 
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