Thanks for all the input so far. Thanks for pointing out that the strategy I exampled is in fact called a synthetic Straddle, not a butterfly. I knew that, apparently my fingers did not. One poster suggested that instead of doing the synthetic play, I should simply buy the straddle (buy both the ATM puts and calls). I hesitate to try that because it seems to me that by buying this straddle, I would be giving up the edge on this trade (buying on the offer instead of the bid either at entry or at exit) and also exposing myself to increased theta risk. Another poster suggested that its better to sell options. I agree that selling options can be a great strategy (as the majority of options expire worthless), but in my case, I only have an intraday window to work with (7 hrs. max). If I sold an ATM straddle, it seems that I'd have a much greater chance of losing money intraday. Keep in mind that I am focusing on stocks that are experiencing out-of-the-ordinary moves and are therefore in a volatile state. Am I wrong?
If you are going to be only intraday trading, you better stick with your concentration on IV compared to historic volatility and limit yourself to volatility trades. Selling calls and puts relies upon taking advantage of time decay as well as volatility on initial premium. The good news is the overall volatility in the market is increasing, and if we trend lower it will continue to increase, breathing some volatility/life back into the premiums of options. Personally, if I trade volatility on the underlying with options, I find straddles and strangles to be the most effective. But you still need enough of a movement to eclipse the losses of the losing leg or be quick enough to unwind it.