By 7.50 wide butterfly, do you mean the September 45/52.5/60 butterfly? I see that going for 2.55 on thinkorswim. Or do you mean the August? The August fly is going close to 3.
the biggest thing here is.. how can you really consider the butterflys max payout when that rarely occurs... another way to delusion yourself.. just my thoughts..
Exactly! 'Fly's max payout is a myth and should not be taken into consideration. However, a wide IB may be a viable strategy if the target profit is in the 10-20% range of the max risk. E.g. SPY Sep 135/140/145 iron butterfly may be established for 3.66 credit. The risk is 1.34. Once SPY moves down to 139 or stays at 140 within next week or two, the spread can be closed for 3.40 or so. That's .26 profit per 1.34 risked or ~20%. The question is how much can one lose (besides full loss) and what is the appropriate position size.
I'd buy a weekly straddle on aapl at the close if it closes cents from a strike... sell it Monday morning
Vol is real cheap here. I probably wouldn't sell premium now, as vol may tick up from here next week. On the other hand, you said that you are buying a straddle, so I guess you want to be long vol.
But a risk to reward ratio is skewed positive because of the low probability of Max profit... so a double butterfly at earnings isn't gonna perform near as well as predicted
Yea I was just theorizing the trade based on premium being cheap and a strike pin on the weeklies will create a rattle Monday morning.. with market makers guessing on assignment