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Member’s Video for Thursday August, 31st 2017
Futures are higher this morning, but still very much contained in the 4th wave range. So, let’s take a few minutes to lay out our next index put butterfly.
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Todd, what are your thoughts on the NDX trade? We’ve given back a fair amount of profits. Are you expecting a small pullback prior to expiration? I do like the power of the butterfly’s you have been focusing on and look forward to hearing more about your teaser from the video. Thanks, Steve
Steve – we exited that trade back on 8/15/10 @ $24.65. It was marked as filled and the text went out. I see it’s trading at $27.00, which is nice as you’ll have more profit, but with the market rallying, it’s no longer valid. What was the highest price you saw for the butterfly?
Darn, I missed that text. Thought it was simply regarding the Tuesday webinar. Didn’t see the normal closing position text format. Can’t remember why but I actually went with a QQQ trade (138/143/147) and paid .62. It’s at .88, so will still make some money, but it was as high as around 1.5. Should have at least closed part of the position back then.
Hi Todd,
I’ve been doing butterflies for a long time, and they are a good way to express a direction (or non-direction). Vol is more important for longer term options. If there is a sharp drop in SPX, VIX and implied vols can explode, and the current (purple line) P/L will not be representative (actual would be more negative for long fly). In ToS, you can adjust Vol (like adjusting dates) to show what happens when vol changes. The problem is that the adjustment will be uniform across all strikes.