When do you close a butterfly spread?

Discussion in 'Options' started by johnshepherd59, Jun 8, 2012.

  1. For example, I owned the june 2400/2500/2600 NDXl butterfly spread until two days ago. I in fact had a profit of almost 30%. The market rallied big time, causing me to sell it at breakeven. Do people here sell their butterfly spreads when they hit a certain profit targret? Or do you hold till expiration?
  2. RPEX


    Do it when you think you will make the most profit:) There is no one size fits all policy, if your view of the market changes then adjust your positions to reflect that.
  3. What he said. That expiration date is meant to be useful info, not some sort of law only violated under extreme duress.
  4. We're supposed to be called "traders" for a reason. What was your expected return on the position? More importantly, take profits when the market gives them to you ....based on your own, personal, drawn out graph of price movement and days until expiration.

    So many get caught up in the minutia of options. Options are so simple, just let them be. You're still guessing on vol and direction, but who cares...if you happen to pick something that worked, then take a profit, or as I teach my people, take half the position off. If you do that, you're always "happy" - if it goes against you, you're "happy" you took half off....if if goes your way, you're "happy" you only took half off....either way, "happy" .....got it?

    All the best,