Thanks for the response. I have a few questions. When you say ratio flies, are you referring to the 132/231? What expiration are you trading these? And how far away from the money are you selling the belly usually? This method is worth looking into, it looks like a legit way to sell the skew with bounded risk.
Because most of your posts read like Greek (no pun intended) to me. I didn't understand what you said. I gave up posting and reading posts. Instead, went back to school to learn your Greek.
OK, so it is belly, not position. Like @destriero, you know what you are doing but you wrote your post in English, not Greek.
Shout out to sle here for confirming in words what it took me many years with ops to realize what I should be doing with OTM flies. Cheap leverage.
I am loving this thread. Finally starting to understand the value of butterflies and it's like wiping glasses clean after a couple of years. Thank you traders
I like to look at the standard +1,-2,+1 fly has buying the ITM option at a major discount - much lower than intrinsic value. But with a major caveat - at expiry the underlying must close around the short options strike.
Remember when we met Bobby over the summer, he had a stock and showed his risk model on TD and had like 8 puts strikes decorated on his model like a god damn Christmas tree