Am I missing something with the short butterfly? I realize if the stock stays the same at expiration, I am out a lot of cash. But, with all the volatility and movement of prices in every direction, I'm guessing neutral short credit butterflies seem like a good idea. I'm thinking of doing a WAG credit butterfly before earnings next week. Sell 1 32.50 Call Buy 2 35.00 Calls Sell 1 37.50 Call All for net credit of $0.55 (midpoint). B/E points would be $31.82 and $37.51, implying that is what I expect the move to be after earnings. Earnings should produce a large move in the stock, so this would be a neutral position. Do you think this is a good spread?
Tell us a bit about the stock. Where is it now? What is the vol? Which month? How did it behave in the past to earning annoucement (a goog like or a small mover), etc. Did you also look at 2 long butterfiles one on each side? Did you also consider doing what you want to do until the eve of earnings, and then switch to what I propose? In the weeks before earning if vol rises and stock does not move you should make money. Then you swicth to the other position.
Just some thoughts. WAG would have to break it jan lows for you to make money on the downside. And for the past couple of months there has been support/resistance around (roughly) 37.50. So it might have trouble getting through that.