As always, no magic bullet and no free lunch. Are 'flys "better" than other spreads? Possibly, but still no inherent edge. It's all about your "predictive" powers and probabilities. Can you predict that vol will increase/decrease, or the market will go up/down/stay the same? You might want to checkout the thread about the ATM bull put verts. They have the look of a 50/50 R/R, but with a 60% win rate over the "long term". Now that's an edge, if you can make it work for you...
I simply stated that you don't want to sell wings. IF you're going to sell something, it should be the near-atm (body) and you want to be a buyer of otm (wings). No absolutes. A fly is essentially a straddle with stops. No spread/combo will have a greater vega sensitivity (other than the long straddle) per unit of haircut.
falcon, check out this site for a recent post on butterflys, (it is a good blog dont be "put" off by the name) http://theoptionguru.com/blog/
Well not to take away from the OP subject matter but basically long vol trades are usually calendar spreads or long option purchases and short vol trades are butterflies or short straddles with follow up adjustments. The key is timing entries and adjustments which is true with any strat. The approach is to not get fixated on a weekly or regular entry no matter what but wait for the options trade at a vol or price that looks attractive to you. I do not have edge but make money on long accrued experience of knowing when to enter, how to make sure I am not overly exposed and manage my risk, and when to adjust or get out. That is basicallly a skill that comes with experience and understanding options. Since it comes down to individual skill, that is why I gave up teaching/mentoring. A strategy can be taught but not the skill to do it successfully over a long period of time.
Good thread going here. I do thank all you old farts who can´t leave a computer alone, even on a Sunday. Somebody argued against SETUPS, but I like them. What I have discerned from the contributions so far on the butterfly, is that the long butterfly as a short term volatility directional trade is the way to go. That eliminates a lot of weeks of testing. Thankyou for that. Atticus cleared up the wings question, in that they would be bought OTM. The body sold near the money. And if I understand the other stuff, it works if you can predict short term direction. Which I can do a couple of times a month anyway, for anywhere from 2 to 6 OEX points on that index. Unfortunately the forecast is only 15 minutes or so before it happens. I don´t yet have the picture in my mind what is happening, but can do it paper trading and see the results to understand where the money is made. I´m trying to figure what it is, how it works and the SETUP. I think I´m going to have to go back and reread it again on the internet. I believe it is two credit spreads? I´m not too clear on that? Or is the body two credit sales, or one credit sale? Something not clear to me here yet. _____________________ In the debate about Howard´s approach to credit spread trading, somebody did mention that you can get wiped on a sudden market rise as well. Indeed, I have experienced that a couple of times. To tweak the fine tuning on Howard´s simple method, perhaps trade Bull Put Credit spreads below VIX 18 and trade Bear Call Credit Spreads above VIX 35 and stay out of credit spreads between VIX 18 and Vix 35 where the unpredictability is, with whipsaws. I just don´t see the advantage really for two month credit spreads. There is a certain amount of technical mumbo jumbo with Howard´s explanations that seems to disatisfy some people. Anybody who is going to sell online advice does this. It´s part of the mystique you sell to amateurs. I remember belonging to some forums years ago, where the scientists bunked pseudo science PERPETUAL ENERGY, ELECTRICITY FROM ROCK, or the EARTH ( Tesla stuff ) and a host of contraptions that produced more energy out, than you put in. For all I know that forum may still be active. I followed it for some years. It was interesting, especially the anit-gravity stuff inventions. The warnings about spreads and the long butterfly are taken, thankyou. I was just smitten by the remark that Atticus is doing quiet well, regularly or something like that, trading volatility on them. If he can do, then so can I? I´m just looking for the entry and exit trick for the setup.
More bullshit. Please provide the brokerage statements or audit. Your first post is pushing some scam?
And your 5800+ posts differ from that. How? Saying something it is a scam without evidence is a scam on those who might believe you. Sheesh.
Another guy who says he's net positive is lenny dykstra..lol All those sites are total bullshit and 100 percent scams...anyone with even tiny edge keeps it to themselves or manage opm in legitimate channels. I see it daily.