Option Trading Strategy: Setup a Butterfly Spread
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- čas přidán 22. 07. 2024
- In this video, I want to share with you exactly behind What the Butterfly is when it comes to Trading Options and why you may want to trade the Butterfly.
The Butterfly’s just a fancy name for a type of spread because it looks like a butterfly. You can trade a butterfly to the upside you can't really tell downside or you can trade it to collect option premium butterfly’s a very effective strategy because it uses a lot less margin and which means a lot less risk to be able to trade those larger dollar value stocks.
First I want to share with you exactly what the butterfly is and what it looks like on a regular diagram and then I want to show you in the trading program and how to set up the butterfly.
#optiontrading #optionstrategy #butterflyspread #tradingstrategy #tradingstocks
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Tradesfly is focused on me sharing my experience and knowledge about trading options. Although we include videos related to other areas of trading, the primary focus is trading options. If you are serious about learning to trade options for selling premium, creating spreads, be sure to subscribe to the channel and join our discord group.
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All of the stocks mentioned in this video along with any other videos we have are opinions and not investment, financial or legal advice. These videos are for general education, information, and entertainment. Do your own due diligence and consult with a registered financial advisor before taking any position since everyone has a different risk tolerance. - Jak na to + styl
you speak very well and not too fast
Awesomely explained. Thanks much, Sasha. Do you have a video on reverse butterfly spread?
Great Video! I learned something new today.
I love your explanation and you speak very well and easy to understand. Pace of your speak is perfect.
Awesome. Thank you so much.. stay cool
thank god for your channel man, helped my options educations so much
Great to hear... Thanks for watching
Thank you, Sasha...I'm learning tons....you certainly know what you're doing! I'm starting out...and,..I'm going to your website to see what's happening!
***** Yes,.....Just taking a look------wow.....I'll keep you updated !!... Thank you..
still trading?
Great video Sasha, Im starting out to learn Option, will spend most of my day today watching your videos.. Thanks for sharing..
Hi great video. If a have a sold a vertical credit spread and it went ITM, can i convert that to butterfly? Thanks!
Awesome Video!!
Excellent illustration. You didn’t speak too fast and choice of words were concise.
Wonderful to hear. Thank you so much for the comment. I'm glad you enjoyed the video
Excellent video
Thanks for the video greatly appreciated! Wider butterflies are better to gain better value but at the expense of more capital. I bought a few and the stocks (SPY & T) I picked did not hit the mark and only gained about $15 with a possible max of almost $600. I was even assigned 8 days early on a couple legs, pretty rare, and lost $10. Not sure about trading these as you need to predict them well to get a decent reward and close to expiration. Getting assigned was scary since occurred Thurs day before Good Fri last week and could close until today Mon. Also learned the max loss / max gain are theoretical at the time of buying an Iron Butterfly. One way to learn via experience .
Hello!
Enjoy watching your content since Sunday coming across your channel.
I have long call butterfly expires Oct 22nd. I placed limit order to close position on Think or Swim when I can reach 40% gain.
If I stay till expirey and price around max profit on expirey day, do I have to close position or broker do it for us and we get crrdited for?
I had alert for bid price that was higher than my sell limit... but order did not get filled. What should I do differently?
You have any video covering closing of butterfly at different time frame prior to expirey or on the day it expires.
Have a great Thursday from FL.
We are a big fan of Sasha, we have seen most of all his videos
hi Sasha, excellent video, wondering what trading software it is in your video?
Best video I have seen on the butterfly
Thank you!
Easy to understand video. Thank you. Has anyone ever told you that you look just like Rami Malek?
Excellent video, thank you! If you have a moment tell me please, why not set up a butterfly just a few days before expiration, with the intention that it lands right at the center on Friday? Does this strategy benefit from longer time?
Excellent
Sasha, after watching many option trading videos on you tube some of them on butterfly strategy your is probably one of the best; however, I could not find an answer to my question how far from the stock price would you want to put the short strike price? Is it one SD, 1/2 SD? what about the wings? how far it would make sense to put the break even points given the IV? what is your rule of thumb if I may ask. Regards, follower
Спасибо, очень помогло!
What software are you using in this video, and can a regular person access it?
How does one go about finding trades suitable for a butterfly? Back ratio?
if I have credit spread and now trade turns against me i.e sold CE 1 lot @ 150 premium & brought higher price CE @ 100 premium , now on expiry I will hv losses if it closes against me, in this situation can I convert the trade where at least I can get my money back by converting the same trade into butterfly ?
Hi, Sasha, i have a question. lets assume the current price for apple is $100. with the butterfly spread strategy, you sell 2 call option at strike price @$100, and buy 1 at $90 and $110 respectively. my concern is, 1. if the stock price go beyond $110, there is only 1 call option @$110 to cover the loss. 2. why set up a call option at $90 strike price? How is it protect the account from losing money. Thanks in advance
Great videos subbed
Very impressive video...
I haven't seen any video where I can get information/clarification against every step. If I have to rank down the best videos of binary options you are gonna be second best after expertoptiontrading.com/oi/ . They are also describing each and every step for every possible outcome. Honestly, you people are doing great work. Thumbs up.
Great video , as usual....HOWEVER....
IT IS ALWAYS NICE FOR YOU TO START OFF AS TO WHY WE WOULD WANT TO TRADE A BUTTERFLY,,,,,RIGHT OFF THE BAT....
THANKS
BINARIES ARE A MAJOR RIP-OFF !!! YOU ARE AN ASSOCIATE SO YOU GET A PIECE OF THE ACTION FROM THE SUCKERS THAT SIGN UP.
So good
thank you so much for watching
Nice software
Sasha, thank you! I've been practicing setting these up on Robinhood, and feel I am ready to do it soon. Quick question please: I can close out the spread anytime it's in a favorable range (profitable), between now and expiration, right? I plan to leave at least 2 weeks, so there's plenty of time for it to land at the strike price at which I sell my calls. Thank you in advance for any help.
Yes you can close your option contracts early depending on where the position sits. So yes this is up to you and if you make a plan then you should stick to that plan. Good luck and let us know how it goes
@@tradersflyofficial Hey Sasha. So good of you to write back! Thank you. I appreciate it. Yeah so I made 30% on a butterfly spread, and currently have another set up, same stock, same spread. Tell me please, I'm confused on one detail, sometimes when the share price is way out of range of my strike price, it still shows that I'm in the green quite a lot, and that I can close it for a profit. How can this be? Is it due to theta decay? I thought it had to get close to the center of the butterfly (strike price of the two calls I sell) to be a winner. Thanks for any reply.
Why do we want to sell during a butterfly? When we are cashing in profits, do you have to sell all three contracts?
The only master
Thanks for watching
Do you have to have a margin account to do this? You say that you are selling at 1:12. Are these short sells?
I saw the share price was at $604 at the beginning? how come at 10:15 none of these options were ITM or ATM for the butterfly spread? don't you have to Buy 1 ITM Call, Sell 2 ATM Calls, Buy 1 OTM Call?
*****
I see, thanks for replying!
Hi what is the software you are using. I do iron ore options and I need a software simillar to.what u showing I would appreciate ur help.
Please refer to our website to see the full list. This one I believe is the thinkorswim platform
I have a question (:. what broker/website were you in that video?
ThinkorSwim platform
Good content
Thank you
Hi Sasha, you're such a great mentor. My partner has a hard time selling his Call Butterfly Option in Charles Schwab Streetsmart Edge expiring in 12 more days. It doesn't get filled, no matter what positive Limit Credit he puts in, even on numbers lower than the current BID. Can you do a video tutorial on Selling to Close a Call Butterfly Spread? Thanks!
It's difficult to say without taking a look at it. You may want to book a coaching session through our website in order to discuss this further. However sometimes if the options are not traded or not favorable to the market then they won't be executed
@@tradersflyofficial I just paid and booked a zoom call with you this Sat evening. Thank you.
Stay calm and peaceful
Yes
hello...(: what broker and website did u use in that video?thanks
Sasha Evdakov hello great video can you explain the channel trending more for beginners little bit more basic thank you very much !!
Hi Sasha, thanks for your informative videos. I have a question for you, I am trying to apply same Butterfly strategy to Swaption. Now, as per my understanding rate at the expiration of contract will behave same as strike price in Option. Can you please confirm if I am on the right track, if not please correct me.
Regards,
Gaurav
sorry for not putting it in best way. I am trying to apply Butterfly strategy on Swaption, buying one call Swaption with low rate(lets say 5),Selling two Call Swaption @ fixed rate 5.50% and buying one call Swaption @6%. Now, in this case strike rate would be rate at the time of expiration i.e. floating and will behave in the same way the strike price behaves. so, the pay off will be based on spread and premium you pay for Swaption. Am I correct ?
yes, all floating rates canceled out, left with the fixed short and longs, the profit that you make is the netting fixed rate cash flows less your option cost
Hi Sasha, nice video, thanks. can you tell me if we can close the butterfly as soon as it hit the $60 dollar level or do you have to wait until the expiry date?
You can close them out early if you want
Any option calls or puts you don't have to wait for expiration but can close at any time.
What is this software or broker that you are using on the video? Thanks.
Think or swim platform by TD Ameritrade
I am confused. Is a butterfly spread the same as an iron butterfly? I just watched option Alpha video! This strategy you sold 2 call option contracts at the money while you bought protection 3 strike prices at the ATM strike price and another call option contract 3 levels below the ATM strike price. In the other video, this guy sold one call option ATM WHILE SIMULTANEOUSLY selling a put option ATM. Then he bought one put option at a lower strike price and the bought a call option contract at a higher price. Two different strategies?
Butterfly or iron butterfly is the same thing basically. Difference is one is a mix of calls and puts (iron) and the other is all calls or all put. Think of the iron butterfly as an iron condor with bringing in the shorts at the same strike and making a top
@@tradersflyofficial okay so an iron butterfly can be all calls, or all puts or a combi atipn of calls and puts. Is one style more common over the other(s)?Thanks.
Whatever your heart desires. Iron butterfly is a mix of calls and puts stems from the iron condor. If you know about the iron condor it's similar. We just covered this in our options class last week
So using butterfly as day trading is a bad strategy?
What if we trade in intraday sasha??
You can do shorter duration option trades - its fine and not a problem, but you increase price risk.
what trading platform are you using?
THINKORSWIM by TD Ameritrade
Which software are you using?
TC2000 and thinkorswim - check the resources page here: tradersfly.com/resources/
Earning profit in future trading, you need to measure from the support line to the mid-peak or break line. Then take this measurement and repeat it up starting from the penetration level. To learn how to do this concept I recommend you use and learn Blended Model strategy created by Dmitry vladislav. it give a knowledgeable and good profit returns.
vega? delta? i'm lost
Call or Put Butterfly - trader can let out-of-the-money options simply expire out-of-the-money. There can be trouble ahead if you do not close out your itm butterfly positions before expiration. Any legs of a spread which are in-the-money at expiration can be exercised. ... The lesson: close out all in-the-money legs/strikes before expiration
The only concern are worries the negative or the ones you are short. Really the long calls or puts are of no concern and as long as you close out the short legs you're fine. You don't have to worry about all the legs just the short ones.
😊😊😊😊😊
“ The Market doesn’t give you any Freebies “ Classic understatement.😬
But I give the market plenty of freebies.
Nice
#marketriders
Thanks! 🙂
no one can teach this much on butterfly on 13 mint like him and make to understand
thankyou so much
I'm glad you have learned something from this video! Check out my other videos. You could also visit our website, we have tons of freebies you might be interested. tradersfly.com/freebies/
How come i never know that AAPL gone to 600++ before in 2014???
Apple’s all-time high stock price was $705 reached in September 2012.
in June 2014 they did a 7-to-1 stock split (the price of the stock was divided by seven and for every share of stock you own, now you have 7).
Apple does that to make the stock cheaper and more accessible for a wider range of customers, and also for inclusion in the DJI index, which is price-weighted.
Do you have a facebook?
Dude I'm happy with $100-$300 per day or even a week and this should help right?
kk
N
Butterfly very good butterfly very good butterfly very good butterfly all country butterfly
Thanks for stopping by and watching the videos
The types of people with big enough accounts to do these trades are not the type of people who have to use youtube to learn how.
Never cared for Butterflies.................Iron Condors are better
Explain why? Don't just say it's better.
I believe that achieving max profit from a butterfly spread is less likely than achieving the max profit from an iron condor. I think that was what he would have meant.
look at me
Send a photo?
Terribly explained
get to the point