Iron Butterfly

[@pollito5452]

Beautiful explanation 🤗

[@telecombiz2397]

I love trading options..

[@ronjcash]

Have a question on Iron Butterflies. I am looking at SPY and added 2 point wings for 10 contracts for all legs. But I saw a vid that added an extra contract on the buy side, which is showing on Think or Swim to have a possible loss, but also infinite profit. I have Buy 198 call, sell 195 call, sell 195 put, buy 193 put. on the 195's I have 10 contracts, on the 198 & 193 I have 11 contracts. Since I get a credit on this, but then Infinite profit if it blows through the wings, it seems if this is correct, that this might be a good trade to put on for a couple weeks if I expect some directional moves? I am thinking about the low probability of a butterfly and this might give high probability of a directional move, while requiring low margins, since the risk seems low? Can you help me figure this one out? Thanks, Ron

[@donchico9556]

Hello from Germany i can not find the iron butterfly strategie on your website maybe you have a link big greetings from Germany

[@DanielOnGuitar]

He didn't talk about the possibility of being exercised at the expiration. How would that affect the overall P/L?? Sounds like you could lose more than the just $124??

[@jakeo1209]

I think you missed it. He covered it at the end of the video. He said, when you get very close to expiration and you see you have already made 90% of the profit, you should consider getting out of all options. Personally, I would get out regardless of whether I made profit or not. I would not want to exercised on expiration date and possibly get stuck with shares. If you get out, your loss should not exceed $124. You also have to remember that you have to pay commissions to the broker. There is, however, a different risk that he didn't talk about. What if you underlying security goes outside of strangle range by a lot long before expiration? This increases chances of one of your options getting exercised, either by someone who have had enough and decided to take a profit or by someone who wanted to own shares that are due dividend (loss to short call on ex-div date). My solution to this problem would be to take your loss and get out of all options.

[@TheJetfighter666]

Wit Me LOL