How to Trade the Butterfly - The Core Strategy of Our Trading Desk

Max payoff is when Expiration is as close to the short straddle strikes. The long strangle expires worthless. Thanks for the video. Maybe you could add a risk graph and payoff simulation. THX

As someone who regularly trades options but isn't consistently profitable, I would gain much more value from videos on trade selection and price target determination as opposed to videos that simply describe the basics of options strategies and how calls and puts work. Can you upload something like this?

Given these recent explosive market times, an Iron Butterfly seems to be insane. I regularly do Iron Condors on the SPX with a 120 point range and just barely squeak by.

Thank you for breaking down this strategy, I've been curious about butterfly strategies for income for quite some time.

Butterfly is gambling in this volatile market. Chance of profiting maybe 5-10%. Not worth trying. I had 10 different strike B.F.s on $BYND and non of them hit.

Lets do a video on how to trade directional options on the expiration day for 900%.

How far out in time do you go with these? 10DTE? 30DTE?

Love those Butterflys ....
Oh Yeah!
Well explained Seth.

Why iron butterfly and not a regular butterfly?

What was the DTE for the trade example shown in the video??

Go more into detail please

SPX can blow through a 25 point spread in an afternoon!

last weeks webinar was a no show!

You should show what happens when the Index hits 2860 which would be a large loss. You have to start showing what happens when a trade does not work.

Some asking, this is 10 days from expiration, at minute 4 top of page says that. Youre welcome.

Cant you be assigned the short puts that expired in the money??

"Brilliant". Thank you.

This seems like a good trade if you have the wings at 85 points or more.

I’m going to paper treated now and TD Ameritrade. It says that I would receive about $4200 per contract. I’ll have to find out what the maintenance agreement will be. I would expect it will be about $2000.

This could be a potential replacement for the iron condor for me IF Successful.

Certainly could be a weekly application.!

Great video

A butterfly trade on SPX is basically a lotto trade. It is most definitely not a strategy to generate consistent monthly income. I generate monthly income trading option selling strategies and I only play butterflies with ETFs or Stocks that are likely to revert to the mean.

This is new to me. Other than Selling ATM for both Calls and Puts, I don't see the difference between and Iron Butterfly and an Iron Condor. I must be missing something.

What’s your exit if goes against you? 1, 2,3x credit received? Or at break even point?

Place the record and pretty sure Warren Buffett hires people to figure out his money now. Plus people used uses name for fake credibility

I'm curious what happens to each leg of these index options (or regular options) if the market is frozen through expiration as in the case of a major national or global event? It would be interesting to know your take in winning and losing scenarios.

Video is interesting. In my trading I stay away from the iron fly. I trade 1 DTE expiration flies with a 1:2:1 structure in stocks with high IV and large cap with usually 5 pt wings. It's pretty simple i use high OI on strikes as pinning direction. The higher the vol the cheaper the fly set up and the higher the payout when it pins.

Realised nobody pointed out something, why is the 25 + 25 point SPX spread requires only $5600 ? It requires $56000 isn't it 50 points x 100 x 10 contracts ? Or am i seeing it wrongly. Cheers.

it seems like just regular iron condor

If a long butterfly expires with the share price between the breakeven points you profit, right?

Thank you for the video it’s greatly appreciated. What happens if you hold the position through expiration? Will you be assigned? I’ve been there with equities and held through expiration and unfortunately I was assigned…

Ironfly of 25 wide and 10 contracts should require 25,000 capital. Why do you say 5,600?

I like your content but you set up to talk about adjustments and then it ended.

What criteria did you use to select 25 wide? Based on Delta?

This strategy seems to me to capitalize on the reversion to the mean principle of probabilities,, things can deviate from the mean but eventually return. So straddle strikes are pinned to mean. I think this strategy would have problems in a strong trending market and would be best in markets that trade in a range with low volatility. However, they could work ok when a market is entering a low volatility cycle and IV is falling.

Thanks for the info looking forward to signing up for one of the classes

Very informative!

+1 (ATM- 25) / - 2 ATM / +1(ATM + 25) Do I get it right? Why is 25 points away for both wings? Does that 25 number matter? Thanks for your time.

i learn a lot from this videos... butterfly startegy seems more of a narrow window type trade however in a high V market .. thats prolly not a good idea.. this may work for a " boring " nothing really happening kind of a market ... i think we are literally defining here how many points spx is allowed to move and there isnt much breathing room...if it goes more in either direction.. its a loss.. i think there are many other good options trading ideas for spx for todays time.... but i think this butterfly works very well with any BORING stock ... that doesnt go anywhere ... perhaps im looking at it wrong ...

Been better if you used 1 contract each as an example instead of crunching all those numbers.

Hello... sorry to be a noob, but just wondering if the short straddle and short butterfly are the same thing? Thanks!

DON’T follow SMB advice. These videos are just @ss at really defining the parameters of such a trade. No TA, no charts, no win/loss ratio, no option chain for better visuals… etc… nothin. SMB videos are lazily made and just straight up hot garbage.

isn't that a iron condor?

should discuss settlement timing and risk of holding any credit options after close. Better to avoid risk of big moves after close by buying back any credit options before 4pm EST

Hi, please explain in a video, the points in options, how you chose these points to set the trade.