curious why you chose to buy the 34 wing instead of the symmetrical 35 wing? The 35 wing also has the second largest OI figure. Just wondering your thought process. I remember you saying the wings are determined from your directional bias?
Weekly Pin Butterfly Strategy
- Thread starter caroy
- Start date
curious why you chose to buy the 34 wing instead of the symmetrical 35 wing? The 35 wing also has the second largest OI figure. Just wondering your thought process. I remember you saying the wings are determined from your directional bias?
it was 35. a typo on the original post.
Week 8 - Update
Trading paused this week do to work commitments and travel. Planning to be back in it next couple of weeks.
Going to fund up the account May 1 with a larger investment in 300-400 k range. So far have been trading a very small account size. Am thinking of some parameters around risk management for this.
Open to feedback for sure from those of you who would like to weigh in. My strategy has been trading straddles in /ES on M,W, Fr thinking about a 1% allocation to each of these and then a 2.5% allocation every Thursday to the one day expiration play in the butterflies. Ideally there would be ten to twelve fly positions a week scaled appropriately to divide the risk evenly between each fly.
In some ways this feels like being a pussy. But then again this capital is coming from selling a business I've grown over the years and don't want to be reckless. My plan is to use the growth in funds to seed some other businesses over the next few years.
Maybe I should take only a 100 k to work with first few months before leveraging up. Also thinking of taking part and just long the spy and sell some call spreads about it. Wheel on spy seems like an option but a lot of the research i've found online points to just hold versus churn with the wheel.
I feel like I've found and honed an edge with the OI pinning in flies and the leverage in day of straddles in /ES.
Whatever I decide risk management wise I plan to post the trading plan here and use the journal to keep me accountable.
Trading paused this week do to work commitments and travel. Planning to be back in it next couple of weeks.
Going to fund up the account May 1 with a larger investment in 300-400 k range. So far have been trading a very small account size. Am thinking of some parameters around risk management for this.
Open to feedback for sure from those of you who would like to weigh in. My strategy has been trading straddles in /ES on M,W, Fr thinking about a 1% allocation to each of these and then a 2.5% allocation every Thursday to the one day expiration play in the butterflies. Ideally there would be ten to twelve fly positions a week scaled appropriately to divide the risk evenly between each fly.
In some ways this feels like being a pussy. But then again this capital is coming from selling a business I've grown over the years and don't want to be reckless. My plan is to use the growth in funds to seed some other businesses over the next few years.
Maybe I should take only a 100 k to work with first few months before leveraging up. Also thinking of taking part and just long the spy and sell some call spreads about it. Wheel on spy seems like an option but a lot of the research i've found online points to just hold versus churn with the wheel.
I feel like I've found and honed an edge with the OI pinning in flies and the leverage in day of straddles in /ES.
Whatever I decide risk management wise I plan to post the trading plan here and use the journal to keep me accountable.
Hey caroy you might be able to save yourself a few points on the exp straddle plays by going the synthetic route. One less option spread to cross.
so you mean long or short the /ES to every 2 ATM calls or puts? long 1 /ES futures long 2 ATM ES Puts?
I was somewhat surprised you did not put the body closer to 35 if it had the largest OI?
Yes that's right so on the stock/future part of the combo you can buy at the bid sell at the offer and then transact your option part of the combo straight away.
Now there is execution risk in this so if markets are real volatile at the time of placing the order then probs just stick to using the options. It's a small edge if you can perform it.
Thank. I think I understand. Is there a difference in buying power by doing it synthetically? Usually I'm buying these straddles on expiration day at 13-16 points or $650-800. I understand the risk is exactly the same if I'm long 1 /ES future and long 2 ATM puts but I'm curious if my broker would require more margin for doing it synthetically? Any thoughts on that. I mean it won't matter when I fund the account at a much higher level.
Depends on the broker but I would think you would need portfolio margin to get the haircut on the syn... But it wouldn't really matter if you are watching the screen and closing out a couple of hours latter anyway. If something went crazy on in the markets you are long the straddle so profits will handle any increase in margin.