SMB Options Tribe - The Weekly Broken Wing Butterfly Trade

[@matthewjamesarguile7355]

BWBs are my favorite trade!!! Sometimes you can basically turn a trade into a free roll. Luv em.

[@neuvocastezero1838]

Thanks, great examples! Do you ever bias the wing the other way and trade it after a strong rally? Or trade it as a debit spread?

[@astrometaqua411]

thanks for walking through, 1) is put BWB a bullish or bearish trade? 2) is the sell strike higher or lower than the prevailing price when setup this put BWB ?

[@johngutierrez2042]

What kind of a profit target do you shoot for? If the UL goes down, would you close it at 25%max profit? What do you think would be prudent? Do you use a GTC order on these?

[@radupop5166]

If the price gets near the short strike, how close to expiration do you need to be in order to see that "extra" profit (on top of the initial credit received)? Does that have to happen in the last 15-30min on expiration day, or even 1 day or 2 prior to expiration? Thx!!

[@billestep6804]

Can separate the shorts and go wider on the credit spread for a credit still. Broken heart. Higher probability of profit.

[@Rkhyderabad-g4i]

Can we do bwb on call side?

[@david_sdiego]

Why not have the broken wing top side to widen the "lottery" zone?

[@RH-rg6il]

exactly; there is no lottery ticket in the examples above. You would need to buy an extra long leg on your short wing ( in this case the wider wing furthest away from the money) to function as your lottery ticket. For example: +1 -1-1< BIGGER LOSS >+1(not your lottery ticket because it prevents the 2nd short leg from being naked)+1(this is your lottery ticket)

[@nixodian]

SMB should talk more on how to manage when things go wrong. Or even talk about it at all rather than just accepting the loss

[@russelleaton]

I'm looking for a tipping service that can advise a broken wing butterfly trade once a week. I just want to place the exact trade advised. Any comments appreciated.

[@amieperrymanSelahFarms]

One of my favorite trades. Would love to learn how other people use it successfully.

[@johnwisdom9208]

The weekly S & P tend to work in an up market. Or a sideways market.

[@brandond2868]

This is a classic case of it always works until it doesn’t. So you risk $9,800 and your reward is on average $200 i.e. the credit received or maybe $400. 4% return isn’t great. You get a nasty spike down or a drop in volatility and say take a 50% loss that is $4,900. There goes the last 12 trades and 4 months of trading.

[@you5711]

I couldn't agree more. The profit to loss ratio is as wrong as you can get. $200/$9800 = 1/49 = 1 unit of profit to 49 units of loss is insane.

[@toolegittoquit_001]

That why he does discuss skillful downside trading. Do you listen to these vids or just show up to throw shade ? Do you even trade ?

[@brandond2868]

@@toolegittoquit_001 yes I do trade that's how a I know this. If you do bwb 50 days out or more you can build in some downside protection but doing it on a shorter time frame like a week or 2 is a recipe for disaster.

[@ricomajestic]

That's why you manage the trade before it gets out of hand and you got to pick the right underlying.

[@brandond2868]

@@ricomajestic That sounds good in theory. In practice when the DOW has 1000+ point swings overnight, there is no time to manage. That is where the one wipe out takes out months of trading.

[@brendanquinn6894]

Is it true the strangle was invented by a guy from Boston ...

[@BerkeleyBarbarians]

I don't mean to be nasty, but I find your presentations very hard to follow. They jump around without leaving time to focus on the details of each graph or table. I find the Analysis graphs much easier to quickly focus on and grasp what's going on. I think you should also concentrate on telling where the BWB is located OTM, ATM, or ITM and how far each way. Explain, explain, explain.

[@jonesr227]

He showed two examples: SPX, 10 and 20 point wings put on at 10 days to expiration with the center strike at 1 standard deviation away on the down side (i.e. at a delta of 16).

[@workemail2188]

If only we had the ability to pause the video. :/

[@davidelet3652]

@@workemail2188 Or slow down the speed of the video...

[@toolegittoquit_001]

Or learn trading before spouting BS 🙄

[@drb.a.bhalodia5438]

Takers of the talk will be more if Hindi language too used