Options Trader Series - Iron Butterfly
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Presenting #Options #Trading Series where I will showcase various strategies in short video format. Hope it will help some of us understand Options Trading better. Feedback welcome.
Options Trader Series - Iron Butterfly
- 1. Options Trader Series Short Iron Butterfly Strategy 1
- 2. When to use Iron Butterfly Best used when prices are in a sideways trend or rangebound. Presence of strong Support & Resistance levels. When there are no major events, news or earnings. Preferably used in shorter expiry time frames ex., weekly expiry. 2
- 3. Greeks of Iron Butterfly Delta: Its a delta-neutral strategy. Gamma: Has a negative impact on our position. Theta: Time decay helps our position. Vega: Increase in Vega is unhelpful to our position. We want it to remain stable or drop. Implied Volatility: Should be FAIRLY priced at the time of entering the trade. 3
- 4. Reward & Risk Profile of Iron Butterfly Reward : Limited to the net credit received. Risk : Limited to the difference in adjacent strikes minus net credit. Breakeven Up: Middle strike minus net credit. Breakeven Down: Middle strike plus net credit 4
- 5. Entry & Exit Rules of Iron Butterfly Entry Close to midpoint of the range. IV should be FAIR. Trend should be sideways. Exit If 90% potential profit is achieved. If Stop Loss @Breakeven is hit on either side. 5
- 6. Payoff Graph of Iron Butterfly 6
- 7. Construction of Iron Butterfly 7
- 8. Thank You 息 Amit Goel Email: amitgoel217@gmail.com 8