Which SPY options strategy to 3x return in a month

[BlueWaterSailor]

Yep! ...and like the sea, the less you fight it, the more it tells you.

For sure. Most of the lessons are way too big to absorb when you're starting out - but if you just survive long enough, the tiny little baby steps in understanding start getting bigger. And then it begins to accelerate... oh, what a lovely moment that is.

Didn't mean to hijack the OP's thread, but I wanted to note the difference in approach. I'm sure most people here know what a spread or a fly is; why they didn't come to mind for me, or some other folks, as the obvious answer is worth thinking about. Something about stating the problem the right way and matching the solution to it... that's worth chewing on.

 

[10 PIPS]

Hi there,
I was referring to an option position known as a butterfly.I quickly looked at the screen and noticed the 12/6 301/297/293 Butterfly was trading around 17 cents. If you are correct and the SPY closes at 297 on 12/6,the butterfly will be worth 4 dollars..

Google Butterfly option and ask away

taowave: dumb question: your butterfly 12/6 301/297/6 a put ? or a call? Thank you!

 

[taowave]

I quickly looked at the put fly ..
Did not check to see when the next Div was,and didn't want to get into a potential div risk discussion on the call fly..

If there is no div,doesnt matter if it's the put or call fly

 

[ironchef]

I quickly looked at the put fly ..
Did not check to see when the next Div was,and didn't want to get into a potential div risk discussion on the call fly..

If there is no div,doesnt matter if it's the put or call fly

While we are on butterflies, may I ask you a couple of dumb questions if you don't mind:

1. Do I need a correct opinion of the direction of the underlying to be profitable?

2. What are the things to consider when setting one up?

Just some general principles will do, no need to get into methods, recipes, etc.

I have no financial training, and after many years trading options, still cannot get pass single legs.

 

[taowave]

Good questions.....
Im going to start by answering your questions in more of a floor trader/directional traders method of looking at Butterflys and keep it simple.Lets assume that you do not hedge out the Delta of your chosen butterfly and keep it a straight directional bet...Of course the price of butterfly will be affected changes in implied volatility,and you should be aware of it.

Yes,the butterfly selected should line up with your forecast on the underlying.Up,down or sideways...We are going to ignore Theta(time decay) vs Delta for now and agree that you need a correct opinion of the underlying.

Like any other bet,you should know your risk reward.The beauty of a butterfly is it is clearly defined.Perhaps you pay 1 for a 10 pt wide fly.You know that the most you can lose is 1,and you can make 9 if the stock goes out at your short strike.Now,keep in mind,if you are trading a butterfly,you do have a delta and it changes as the underlying moves.If a stock is trading at 100,and you have a bullish 100/110/120 Fly on,if the stock gaps on takeover news to 130,you will lose money,and your butterfly with positive delta will now become a bearish bet as your "sweet spot",i.e your short strike is now 20 points beneath 130...Essentially,if you are betting on direction with butterflys(no hedging),you are more or less predicting a range...If it moves way outside that range,you will lose money..

You should have a decent understanding of verticals to intuitively understand flys

Let me know if you digested most of this...

If you did,pick a stock you like,tell me your thoughts on it and come up with a fly and we can go over it and discuss the basics

 

[ironchef]

Good questions.....
Im going to start by answering your questions in more of a floor trader/directional traders method of looking at Butterflys and keep it simple.Lets assume that you do not hedge out the Delta of your chosen butterfly and keep it a straight directional bet...Of course the price of butterfly will be affected changes in implied volatility,and you should be aware of it.

Yes,the butterfly selected should line up with your forecast on the underlying.Up,down or sideways...We are going to ignore Theta(time decay) vs Delta for now and agree that you need a correct opinion of the underlying.

Like any other bet,you should know your risk reward.The beauty of a butterfly is it is clearly defined.Perhaps you pay 1 for a 10 pt wide fly.You know that the most you can lose is 1,and you can make 9 if the stock goes out at your short strike.Now,keep in mind,if you are trading a butterfly,you do have a delta and it changes as the underlying moves.If a stock is trading at 100,and you have a bullish 100/110/120 Fly on,if the stock gaps on takeover news to 130,you will lose money,and your butterfly with positive delta will now become a bearish bet as your "sweet spot",i.e your short strike is now 20 points beneath 130...Essentially,if you are betting on direction with butterflys(no hedging),you are more or less predicting a range...If it moves way outside that range,you will lose money..

You should have a decent understanding of verticals to intuitively understand flys

Let me know if you digested most of this...

If you did,pick a stock you like,tell me your thoughts on it and come up with a fly and we can go over it and discuss the basics

Thank you. I have to study your post carefully.

I will get back to you later.

 

[bln]

I looked at various puts for different expiries in November and December but I cannot find one that will generate 3x my capital in one month

Should be doable with an OTM Put. I made 800% in two hours previous week. During Wednesday SPY was trading at 311.5 and I bought the Put expiring the same day at strike 311.5 for 0.25 and 30 min later SPY started to plunge towards 309. My Put was trading at 2.4 at the highest price.

x3 should be doable if you select the correct strike and expiry. You have to be right on the outcome too, otherwise your money is gone.

 

[keroppi]

I had a simple question for SPY options.

Say today is 25 November. If I purchased a 25 November option, what time does it expire? What time is it no longer tradable? This is for Eastern Standard Time.