Forums - Weekly Iron Butterfly on SPY

HOME FORUMS BROKERS SOFTWARE BOOKS CONTACT US

Your Account • Become a Member • Help • Search

	Forums ›› Main ›› Options ›› Weekly Iron Butterfly on SPY

Page 1 of 3: 1 2 3

rocky_raccoon

Registered: Mar 2012
Posts: 138

07-12-12 09:34 PM

Hi there!

I've been observing weekly options on SPY for a while and I found that there is a very high probability trade in SPY weeklies.

On Thursday morning, sell a weekly Iron Butterfly such as 131/134/137 on SPY and close it on Friday afternoon or Monday morning.

The typical credit for this trade is ~$2/spread. The margin is ~$1/spread.

There is a good chance that the trade makes .10-.20 (or 10-20% return on margin in one day) by Friday afternoon.

What I am not sure of is the probability and size of the potential loss. I don't think that total loss (full margin) is possible in just one day but what is the reasonable amount of loss?
Also, what position size (% of account) is suitable for this trade?
Is 5% too big or too small?

Regards,
RR

Edit/Delete • Quote • Complain

traderlux

Registered: Aug 2009
Posts: 620

07-13-12 09:00 PM

Quote from rocky_raccoon:

Hi there!

I've been observing weekly options on SPY for a while and I found that there is a very high probability trade in SPY weeklies.

On Thursday morning, sell a weekly Iron Butterfly such as 131/134/137 on SPY and close it on Friday afternoon or Monday morning.

The typical credit for this trade is ~$2/spread. The margin is ~$1/spread.

There is a good chance that the trade makes .10-.20 (or 10-20% return on margin in one day) by Friday afternoon.

What I am not sure of is the probability and size of the potential loss. I don't think that total loss (full margin) is possible in just one day but what is the reasonable amount of loss?
Also, what position size (% of account) is suitable for this trade?
Is 5% too big or too small?

Regards,
RR

did you open a position yesterday, thu 12?

Edit/Delete • Quote • Complain

rocky_raccoon

Registered: Mar 2012
Posts: 138

07-13-12 09:18 PM

Quote from traderlux:

did you open a position yesterday, thu 12?

Yes, I did and it does not look good now (down ~30%). I decided to keep it till Monday. SPY may have some pull-back in the morning and that may bring the trade to break-even or reduce the loss.

On the other hand, 3 previous trades produced 22%, 12% and 8.5%, so I am still positive overall.

Edit/Delete • Quote • Complain

traderlux

Registered: Aug 2009
Posts: 620

07-14-12 04:49 AM

are you trading an iron fly as

+ otm put
- atm put
- atm call
+ otm call

Edit/Delete • Quote • Complain

hedgeman

Registered: Jul 2012
Posts: 78

07-14-12 08:38 AM

I think you have to keep those weeklies really small or as a hedge for your larger monthly trades. I know returns are possible but looking at Fridays action, I'm sure lots of pain to go with that up move on those trading weeklies. And moves like that are too common. Just my take.

Edit/Delete • Quote • Complain

rocky_raccoon

Registered: Mar 2012
Posts: 138

07-14-12 04:04 PM

Quote from traderlux:

are you trading an iron fly as

+ otm put
- atm put
- atm call
+ otm call

Yes

Edit/Delete • Quote • Complain

Page 1 of 3: 1 2 3

Receive an email whenever a new post is added to this thread by subscribing to it.

Rate This Thread:

Forum Jump:

Conduct Rules - Privacy Policy - Day Trader - Day Trader Forum - Best Trading Software - Sitemap

WHILE YOU'RE HERE, TAKE A MINUTE TO VISIT SOME OF OUR SPONSORS:
Advantage Futures Futures Brokerage & Clearing AMP Global Clearing Futures and FX Trading Bright Trading Professional Equities Trading CTS Futures Trading Software DaytradingBias.com Professional Trading Analytics ECHOtrade Professional Trading Firm	eSignal Trading Software Provider FXCM Forex Trading Services Global Futures Futures, Options & FX Trading Interactive Brokers Pro Gateway to World Markets JC Trading Group Direct Access Trading MB Trading Direct Access Trading	MultiCharts Trading Software Provider NinjaTrader Trading Software Provider OANDA Currency Trading optionshouse Option Trading & Education Questrade Canada's #1 Online Broker Rithmic Futures Trade Execution Platform	SpeedTrader Direct Access Trading SpreadProfessor Spread Trading Instruction thinkorswim by TD Ameritrade Direct Access Trading TradersStudio System Building & Backtesting Trading Technologies Trading Software Provider Trend Following Trading Systems Provider