It's the same as for the Kia Sorento, KitchenAid blender, or Sunoco Ultimate high-test gas: research the product, research the market, research the current conditions. "Work." ("This is you being helpful, is that right?" Yes. Indeed. )
@met1989, with due respect, how many vague, 1-sentence, butterfly threads are you planning on starting? These are all yours.... https://www.elitetrader.com/et/threads/options-volatility.334646/ https://www.elitetrader.com/et/threads/butterfly-adjustment.334462/ https://www.elitetrader.com/et/threads/greeks.332577/ https://www.elitetrader.com/et/threads/spx-execution.332376/ https://www.elitetrader.com/et/threads/margin-requirements-tdameritrade.332155/ https://www.elitetrader.com/et/threads/adjustment.331911/ https://www.elitetrader.com/et/threads/butterfly-options.331719/ https://www.elitetrader.com/et/threads/execution-of-spreads.331693/ https://www.elitetrader.com/et/threads/es-options.334396/ https://www.elitetrader.com/et/threads/butterfly-options.331414/ https://www.elitetrader.com/et/threads/stop-loss.331116/ https://www.elitetrader.com/et/threads/short-butterfly-spread.331058/ https://www.elitetrader.com/et/threads/spx-es-options.330667/ . . . I could go on.
One way to check your price is to generate a smoothed market volatility (at ORATS we call this the SMV) skew and compare the theoretical values or implied volatilities of the market. In the picture below are the IVs and the SMV. You might compare the red square mid market IV to the SMV vol marked with an 'X' and a line through them. https://gyazo.com/03ac9fedcb39ac34e881108ceb0d0e51