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Brokenwingbutterfly

Opening (Margin): SPX January 17th 3705/2 x 3735/3755 BWB*... for a 1.45 credit. Comments: Doing something a little bit funky here for me, targeting the current zero gamma level at around 3935 with my short options and erecting my longs out from there. Metrics: 1.45 credit on buying power effect of 8.55 with a max profit potential of 21.45. Delta 1.18; theta 4.46. A "perfect landing" would be at 3735 at expiry, but will take profit quickly if the opportunity presents itself. (Hitting a "perfect landing" is extremely rare, since it needs to be right at short put strikes right at expiry). * -- Broken wing butterfly. The 3705/3735 side is narrower than the 3735/3755 side to create a profit zone without any upside risk.
SP:SPXLong
by NaughtyPines
1
GME 21/24/28 Broken-Wing Put ButterflyRange-Bound Pullback Set-Up: Since about early September GME has been range bound between 29 and 24. The entire market was down for the month of September, yet this traded range bound in this area. But towards the end of September, it tightened it's range bound between 27 and 24 and trending lower at a slow pace. With the big green day we had in the markets Thursday after CPI and another green day on Friday, this really didn't move as much. If the range is getting tighter and trending lower, we could be setting up to head lower in the 21-24 range. Which is why I had the idea of a Broken Wing Put Butterfly which can work great in these range bound set ups. In order for me to put this trade on, I need to see this trade below were today's candle ends up. Because as of now, it's looking like a reversal candle at the area of resistance. So I'll have to check this tomorrow before executing my trade. As far as stops, I'll be position sizing with max loss. If the market decides to head higher the rest of this month and GME decides to follow the general market, this could make it's way back to another resistance point of 29ish. If by the end of this week it gets to 29, I'll want to see a reversal candle at 29, before I decide to get back in another trade. Trade Set-Up: No trend. It's making relatively equal highs/lows. The 20-day & 50-day SMA's are flattening out as well. I've established that resistances for this particular trade idea is 27 and support at 24. This small rally has brought the stock back up to resistance level and a reversal candle is currently forming. T.E.S.T. Timeframe: 3 weeks. I'll have a December 2nd expiration date. Entry: If this trades below todays possible reversal candle, my entry will be right around 26. Stop: I'll be positioned for max loss. Target: My target is 24. Profit Score: Potential- 2 ATR- 2.18 Score- 0.92 Stock Outlook: 0 to -1 Trade Breakdown: Chart Set-up is Range-Bound and consolidating. Entry: I'm going to sell the December 2nd 24 strike and buy the December 28 and 21 strike. There are no earnings scheduled until December 14th so stable volume is anticipated. Position Sizing: This should be a Net Debit of about 3.10ish by tomorrow if it does fall to 26 tomorrow. I'll be setting up for max loss and only risking 2% of my portfolio. Trade Management: A week before this expires expires I will analyze the trade to determine if I should close out the position before expiring. If this falls below 24 before December 2nd and looks like it wants to run back up to 24, I might want to hold this to expiration to close out near the apex of the trade.
NYSE:GMEShort
by MMOTA_
2
Opening (IRA): SPX May 6th 4110/2 x 4210/4260 BWB*... for a 4.40 credit. Comments: I would like IV to be higher and SPX to be weaker, but can't have everything. Selling the 20's and erecting my longs out from there. 4.40 credit on buying power effect of 45.60; 9.6% ROC at max 4.8% at 50% max. Will generally look to take profit at 50% max, but will also look to manage the two aspects of this setup (a short put vertical credit spread and a long put vertical debit spread) if the opportunity presents itself. * -- Broken Wing Butterfly.
SP:SPXLong
by NaughtyPines
Trade Idea: SPX May 6th 4025/2 x 4125/4175 Broken Wing ButterflyIn previous market environments, my go-to strategy in SPX was the short put vertical, but if you've been around the past several weeks and had those on, you probably did a bit of sweating as price moved into the spread, took some loss on those that were fully in the money (only to scream as price whipped back the other way), and or wished that you had a setup on that you could play "elevator up/down" with. Pictured here is an alternative strategy that is mildly net delta long, has positive theta, will beneficially benefit from a move into the butterfly's "body," and has similar ROC metrics as the 16 delta short leg spreads I ran previously -- the "broken wing" butterfly. Here are the metrics for this setup, which I set up by selling 2 x the 20 delta's and then erecting my longs out from there: Max Loss/Buying Power Effect: 45.00 ($4500) (Realized on a finish below the break even) Max Profit: 55.00 ($5500) (Realized on a finish at the short put strike where intrinsic in all the legs converges on 0) Credit Received: 5.00 Break Even: 4070* (No Upside Risk) Probability of Profit: 87% Delta/Theta: 1.88/7.20 ROC as a Function of Buying Power Effect: 5.00/45.00 = 11.1% at max; 5.6% at 50% max. From a trade management standpoint, you will generally put these on as a unit and take them off as it unit, with the vast majority of take profits at 50% max since it will be extremely rare that you get a "finish" right at the body of the setup (i.e., 4125 with 0 days to go) and either aspect's converging on max generally won't occur until very late in the trade's cycle. However, if you do get a move such that the long put vertical aspect (1 x 4125 short put/4175 long put) converges on max (50.00), you'll want to look to strip that aspect off, since that is the most you can make on it, either allowing the remaining short put vertical to "ride" or rolling it out for a credit. Similarly, if the short put vertical aspect (4025 long put/1 x 4125 short put) converges on max (0.00), you'll want to look to strip that aspect off, since that will be the max you'll be able to make on that aspect, then allowing the long put vertical aspect to ride. At that point, the remainder of your setup will be "risk free" since the risk in this setup is in the short put vertical aspect. I'll look to piddle with one of these setups next week during my regular Friday routine and will post the trade if I get filled. * -- Short put strike (4125) minus the width of the narrowest wing (50) minus the credit received (5.00).
SP:SPXLong
by NaughtyPines
4
OPENING (IRA): SPY NOVEMBER 20TH DOUBLE BROKEN WING BUTTERFLYI'm probably sticking this out there in too lengthy of a duration relative to the binary event I'm looking to play, but wanted to post it in the event I space the play out. Pictured here is a double 4 x 2 broken wing butterfly. Due to its being an 8-leg position, I legged into the put side for a .35 credit and then into the call side for a .34 credit, for a total of .69. Here are the metrics for the put side: max profit: 2.65, max loss: 1.65, with no upside risk. If price finishes above all three strikes (i.e., everything approaches worthless), I keep the credit received. Max profit is realized on a finish at the short put body at 302. And for the call: max profit: 2.34, max loss: 1.66, with no downside risk. Similarly, if price finishes below all three strikes, I keep the credit received, with max profit being realized on a finish at the short call body at 351. The oppositional side is put on essentially "buying power free," so I got into the play for 1.66 of buying power with total credits received of .69, so if price just slops around between the short option legs, the profit potential is 41.5% ROC at max. If the general elections turn out to be a "nothing burger," I'm fine with that, but am looking to take advantage of substantial movement to either side in the event it turns out not to be, either in run-up jitters or thereafter.
AMEX:SPY
by NaughtyPines
2
TRADE IDEA: SPY DEC 21ST 256/2X261/263 BROKEN WING BUTTERFLYMetrics: Probability of Profit: 75% Max Profit: 2.50/contract Max Loss: 2.50/contract Break Even: 258.50 Delta: 3.59 Theta: .43 Notes: Looking to add some small long delta to my SPY core position. Unlike short puts or short put verticals, this setup will actually benefit from price moving in toward the setup. Although max profit is realized on a "pin" to the short put strike at 261 at expiry (a virtual unlikelihood no matter what universe you're living in and how much hopium you're smoking), I'm just looking at it as a "risk one to make one," high probability of profit hedge that I'll take off when it's no longer needed and/or starting at 20% max (.50 -- which is the credit I hope to get filled for).
AMEX:SPYLong
by NaughtyPines
2
OPENING: TLT NOV 16TH 112/2X114/115 BROKEN WING BUTTERFLY... for a .71/contract debit. Small bet that treasury sell-off is overdone here and/or there will be some risk-off running into mid-term elections. Metrics: Probability of Profit: 51% Max Profit: 1.29/contract Max Loss: .71/contract Break Even: 112.71 (no downside risk) Notes: Will begin to look at taking the entire setup off as a unit at 25% max. You can also look to strip off aspects of the setup, with the ideal goal being to get what remains for free (e.g., strip off the short call aspect at or near what you paid for the entire setup, allow the long call vert aspect to "ride").
NASDAQ:TLTLong
by NaughtyPines
OPENING: OIH JUNE 16TH 24/27/27/28 BROKEN WING BUTTERFLYA slight variation on a Super Bull (short put vertical financing a long put vertical; bullish assumption). Metrics: POP%: 71% Max Profit: 1.12/contract Max Loss/BPE: 1.88/contract Break Even: 25.88 Notes: There are a couple of different ways to work this intratrade: (a) take the long put vert off in profit, leave the short put vert to ride; (b) the inverse of that; or (c) look to take it off as a unit. Here, I'll be shooting for 50% max and to take the entire thing off as a unit, but will also watch for opportunities. Filled for a .12 credit, by the way ... . Generally, this isn't my go-to instrument (XOP is more liquid), but I'm working a trade in XOP and don't want to step on that setup.
AMEX:OIHLong
by NaughtyPines
1
IWM Broken Wing ButterflyTaking advantage of a little IV in the Russell with a Put BWB. Trade Setup: -1 IWM Mar 17 134/136/136/137 Put Butterfly @ 0.18 DTE: 31 Max Win: $118 Max Loss: $82 Breakeven: $134.82 Trade Management: I will look to take 50% off this trade if we come down to $136.00 in the upcoming cycle, so around $59. If the market decides to crash, I am comfortable with the risk in the trade. I would likely take of the winning put side of this strategy and roll out the short put side for more premium, if that was the case. Because of the structure of this trade, you will see that this trade has $0 upside risk and will in fact, end up with a max of $18 win if the options expire worthless. We will see if we get there. Green is profit zone; vertical bar is expiration.
AMEX:IWM
by Benji
SPY Broken Wing ButterflyGetting my # of occurrences in a small account. SPY has been on a tear lately and want to capture a bit of the upside, without any risk to the downside. Trade Setup : -1 SPY Mar 17 236/237/237/239 Call Butterfly @ 0.19 DTE: 29 Max Win: $119 Max Loss: $81 Breakeven: $238.19 Trade Management: Best case scenario, SPY trades around 237 near March expiration for close to max profit. I'll likely look to take 50% out of this. $0 downside risk on trade and will let expire or cover for close to nothing if we get a move down. Fits risk parameters here as well, although we would appreciate some IV increases across the board. Green is profit zone; vertical bar is expiration.
AMEX:SPY
by Benji
TRADE IDEA: VIX DEC 28TH 11.5/13.5/13.5/14.5 BROKEN WING BTRFLYFor various reasons I won't get into here, I don't do butterflies very often. This is a variation on a butterfly, however -- a "broken wing" butterfly. In this case, the play is made up of a 2-wide long call vert (the 11.5 plus one of the 13.5's) and a 1-wide short call vert (one the 13.5's plus the 14.5). It's considered "broken" because flies are ordinarily symmetrical setups; here, one spread is wider than the other, so it's "broken." In this particular case, I'm looking for volatility to increase going into FOMC/rate hikes, and I figure with a break even of 12.40 and about three weeks to go until expiry, I have a pretty good chance of making some money on the setup. Metrics: Probability of Profit: 42% Max Profit: $110 Max Loss: $90 Break Even: 12.40
TVC:VIXLong
by NaughtyPines