Destriero - Butterfly Trades

Discussion in 'Options' started by ironchef, Dec 11, 2020.

  1. ironchef

    ironchef

    I am my own worst enemy:

    Everyone here drilled into me never legged in or out of a butterfly. So I have two more GILD flies, one 60/64/68, the other 61/64/67. yesterday GILD gapped up to $68 and I panic, closed out the challenged wings but left the other side alone. Shouldn't have done it! Now I can only make a small profit if GILD is above $64 or take a loss if GILD goes below $64 at expiration. If I did nothing, both would still be profitable and I have a shot at some decent profits. :banghead:
     
    #361     Jan 21, 2021
    .sigma likes this.
  2. caroy

    caroy

    As I've been trading weekly flies I will leg out at the close and on expiration day but I only do it after buying back the guts first leaving my long gamma and a chance for the long options to run into the profits. Did it last week as I exited draft kings and ended up a few bucks ahead for doing it that way. But I often ask if it's really worth it.
     
    #362     Jan 21, 2021
  3. taowave

    taowave

    Does not compute...

    I am guessing you are long the flys,and assuming they are call flys..

    What is a challenged wing?? Im guessing the upper strike wings??

    Why would you blow out of your long wing as the stock gapped up?? Did you want to get short??

    Your sweet spot is 64,as I believe you are now in the 1x2 with "unlimited" upside risk.

    Either I am completely confused or you are a bit confused




     
    Last edited: Jan 21, 2021
    #363     Jan 21, 2021
  4. ironchef

    ironchef

    I have two sets of flies: both 121 calls one set is long 1 60, short 2 64 and long 1 68, the other is 61/64/67.

    I closed out the upper "spread": bought to close short 64 calls and sold to close long 68 calls.

    So now I am left with a set of long 60 short 64 and a set of long 61 short 64.

    Does that make any sense?
     
    #364     Jan 21, 2021
  5. ironchef

    ironchef

    Thank you for the coaching.
     
    #365     Jan 21, 2021
  6. taowave

    taowave

    Ok,so you were long the flys and closed out the short 64-68 call spread,leaving you long the 60-64 vertical..What did you pay for the 64-68 call spread?? What did you pay for the fly?? You may have locked in a loss..

    Im guessing you were trying to cover deltas,but thats not the way I would go about it...

    You shifted a positon that had a favorable risk reward to one where it is now unfavorable with very limited upside,if any at all


     
    Last edited: Jan 21, 2021
    #366     Jan 21, 2021
  7. Justrade

    Justrade

    NO... doesn't make sense
    Unless U covered the 64-67 as well
    which I know U did if u say ur now holding 60-64 and 61-64 call spreads
     
    #367     Jan 21, 2021
  8. taowave

    taowave

    He covered both short verticals,and is now synthetically short the OTM put spreads at most likely pennies

     
    Last edited: Jan 21, 2021
    #368     Jan 21, 2021
  9. .sigma

    .sigma

    I’m just playing devils advocate. I have no idea if they truly do select the Vice Presidents or not, but it’s healthy to question anything related to these oligarchs.

    thanks for the kind words, appreciate it.. you are too!
     
    #369     Jan 21, 2021
  10. caroy

    caroy

    As a member of the papist distributivism line of economic thinking I can't say i'm a fan of either party when it comes to politics. I am very curious what the Orange One does next. He owes Deutschebank a rather large sum due in a year. I'm hoping for an ex-president reality show strictly for the entertainment value. For Biden I respect his tenacity. He's been running for president for over three decades and finally hung in there for a win. I'm hoping for a better spirit of bipartisanism. I have a number of friends who are big Trumpers and were convinced he was returning at noon on Wednesday to arrest all the democrats. I can't understand how in the last few years so much thinking has become detached from reality. Hoping the dumpster fire of 2020 is behind us and things look up.
     
    #370     Jan 21, 2021
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