It's an intra-market butterfly spread. Buy 1 CL June 2020 contract, Sell 2 CL September 2020 contracts, buy 1 CL December 2020 contract.
Futures and options are very very different because futures do not have shit like theta and exercise possibilities before expiry (On American style options at least) I am trying to learn my darnedest about options at this point, because pure directional trading is getting weary.
Look at the settlement sheet for CL. https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html The Butterfly is the price differential between the June 20, Sept 20, and Dec 20 Contracts. It’s a market within a market and it’s a wonderful way to trade.
Indeed. Here is what bone is on about. This is a very close approximation to which fly he's quoting... 200 bux margin requirement, to hold 4 CL contracts. Although I do tend to get confused on this bit in their listing... @bone, this is +1 -2 +1, or -1 +2 -1?
Both - your choice. Buy the wings or sell the wings. So, for example, if you buy the wings and sell the body of a particular CL butterfly at, let’s say, -21 and then a week later you sell the wings and buy the body back at +12 you’ve banked 33 tics or $330 on the trade. If, for example, you’re paying $4 per RT for CME Nymex your brokerage/clearing costs are 4 x $4 = $16.
Whats interesting is how futures have zero theta but they expire just like option contracts. I guess this is just the inherent structure of the product, similar to forwards and even warrants. I don't think warrants had theta?
I think I've read about this before... how some markets are priced in butterflys? I'm assuming that's what this link is before I click it
butterflies are 4 fees n 4 slippages and if not native need to be executed on expensive and sophisticated software. they revert all day and if you have low enough fees you can 20 bucks a contract back n forth but thats better served by algo not a human. butterflies are the most boring