Charles Cottle baby butterflies

Discussion in 'Options' started by emulimu, Jun 18, 2019.

  1. emulimu

    emulimu

    I paid lot of money and bought his stuff but it's way over my head. It's collecting dust since a few years. Hoping someone can explain with a simple example of how an iron condor has baby butterflies when you dissect it. Thanks in advance.
     
    Giddiyup likes this.
  2. ETJ

    ETJ

    Brilliant guy.
     
  3. No such thing as a baby butterfly... that would be called a caterpillar
     
    kj5159, MarkBrown and birdman like this.
  4. minmike

    minmike

    Works same with options but easier to see in eurodollar futures.

    M9. 1
    Z9. -2
    M0 1

    Same as long 1 m9u9z9, long 2 u9z9h0 long 1 z9h0m0 flys.

    Sorry if this is jumbled. Best way to see is play around in excel with different combos. See how they combine to make others.
     
  5. MKTrader

    MKTrader

    Maybe. But how many of these "brilliant" option teachers have actually made a good living from their trading over the last few decades? You'd think they'd do well if their "high-probability, very limited risk" trades worked out like they said.
     
    traderslair likes this.
  6. guru

    guru

    Here is basic example:
    Let’s say you buy the following 2 butterflies:
    1x$100C/-2x105C/1x110C
    and
    1x$105C/-2x110C/1x115C

    You should see that the 2nd butterfly bought one of the calls that was sold in the 1st butterfly (105C), while selling two calls bought in the 1st butterfly (110C).
    Now when you look at how many calls you ended up with, you’ll see you have an iron condor:
    1x100C/-1x105C/-1x110C/1x115C
     
    yc47ib, tommcginnis and emulimu like this.
  7. jamesbp

    jamesbp

    The primary purpose of dissecting your position is to identify any particular elements of the position that may be too expensive to be long ( to be sold ) or too cheap to be short ( to be bought )

    You can see your condor as
    ... a series of overlapping flies
    ... a pair of vertical spreads
    ... a long strangle v short strangle

    In addition when I am looking at a Fly, I am looking at
    ... Call 1x2 + outright call ( at the higher strike wing )
    ... Put 1x2 + outright put ( at the lower strike wing )
    ... straddle ( at the body ) v strangle ( in the wings )

    If I was looking to sell the Fly and either / both of the wings has negligible extrinsic value
    ... then I would just trade the 1x2 or straddle

    Cheers
    James
     
    yc47ib and Aged Learner like this.
  8. Giddiyup

    Giddiyup

    Youngot
    Probably approaching zero.
     
  9. tommcginnis

    tommcginnis

    It's either a call condor or a put condor; an iron condor (term used by the OP) is calls + puts.

    Capture.PNG
     
    beginner66 likes this.
  10. ETJ

    ETJ

    "Maybe. But how many of these "brilliant" option teachers have actually made a good living from their trading over the last few decades? You'd think they'd do well if their "high-probability, very limited risk" trades worked out like they said."

    Charlie did very well trading, publishing and trading.
     
    #10     Jun 19, 2019
    guru and traderslair like this.