"I am considering doing..." threads would be much more entertaining if the OPs actually <i>did it</i> whatever it is they propose, for a year or two, then reported back what they'd learned after absorbing some losses.
Selection bias, though.... anyone reporting back on ET is likely to have only suffered small losses. - Big losses, and they won't mention it. - Big wins, and they'd be too busy raising money to clue in potential competitors.
Hey Jw... I've followed your thread on short straddles. It's interesting that you'd consider an Iron Butterfly, since the cost of insurance (i.e. long wings) is sooo high... I think TivTheTrader has it right, short straddles (or even short strangles) seems to be the best route if one is able to avoid the dreaded "black swan" events. I think the key is playing the probabilities and managing risk. A major point... don't over leverage! I like your notion of playing the probability of a direction when trading a short straddle; however, instead of a ratio of 3:2 or even 3:1 with the puts vs. calls, I would enter into a strangle with the side that I think is most likely to go down to be deeper ITM. Needless to say, a major "achillies heel" of this strategy is rising IV!!!! Since volatility typically rises when the market is dropping, perhaps the only insurance is otm puts during times of high uncertainty (i.e. macro news events)... Any further thoughts... thanks, Walt