Don't you mean highly improbable? And the OP may not know what you mean when you say "your fly pinning to the exact penny." If they are still learning how a credit spread behaves, they may not know what a fly is, and they may not know what you mean by pinning. With that being said, I agree that it is not common to actually realize the max profit or loss on a butterfly. But I've done vertical spreads--both credit and debit spreads--that I have held through expiration. If both legs are far enough in the money, I sometimes just let the position dissolve on its own through assignment and exercise. And that will yield the max profit or loss. And it closes the position without any commissions (at most brokers). BMK
yes improbable, thanks. well just cause (assuming) they don’t know what I mean doesn’t mean I can’t talk about it. Plus, hopefully the thread starter reads about my fly pin comment and sparks his mind to find out what it means. A fly is just a verticalized vertical. It’s two vertical spreads conjoined/sharing the middle body strike. I think bringing up a butterfly in a vertical thread is ever-more important as you’ll understand verticals better once you understand butterflies, or vice versa. And yes, I didn’t say spreads can’t reach the max terminal payout. I’m just saying as a spread trader, you’ll want to manage a percentage of that R:R, giving the trader a sense when to exit efficiently.
He was kidding around. The image associated with my username here on this board was, up until this morning, a photo of Bernie Madoff. Madoff died today in prison at the age of 82. I changed my photo because I thought it seemed like it was in poor taste now that he is dead.
I almost always buy the corresponding debit spread over the credit. The only time I’ll opp for the credit is if vol is compensating (high IV). I trade mostly debit verticals (long/short), plain vanilla calls/puts (ATM/OTM), and butterfly spreads (ATM/OTM).