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Are you a market bear? Here is a trade for you.

Recently I wrote an article about the “time bomb butterfly” that was published in the March issue of Modern Trader Magazine. The butterfly option trading strategy has many different structures and uses. The time bomb butterfly involves buying an out of the money all call or all put butterfly in the direction you think an underlying asset is going to trade. Currently in the market there is a lot of uncertainty among traders as to which direction the market will now head. Time Bomb Butterfly This can be a good set up for the time bomb butterfly in the SPX. One example would be an all put butterfly placed in the April expiration 37 days from now, that is centered at 1940. While the width of the fly is up to the individual trader, using a 20-point wide wing could be structured as follows:   Buy 1 APR 16 1960 put Sell 2 APR 16 1940 puts Buy 1 APR 16 1920 put   This butterfly is currently trading at approximately 1.25 per contract, costing $125 for each 1/2/1 fly structure that is entered plus commission. Profit If this butterfly at expiration is trading near 1940 this trade would net […]