Great video, best explanation on butterfly i have seen, clear and concise without any information overload. I like how all the applicable parts are covered such as entering a trade base on IV rank and also explanation of the greeks to help us in evaluating our position. Keep up the good work
Wow, your explantion is incredible. Just one point on long butterfly is that is it the same as the Iron butterfly, i have traded a couple recently the advantage of them is that they are very cheap so, and your losses are very small if you lose but if you only stay a few days 5/10 you will most likely win, and since you bet very little it is easy to double your money by making little gains. I appreciate your in depth work. No one explains it the way you just did, thank you 👏👏
thank you very much. I struggle to understand how to use this strategy in O DTR or 1 DTE. What I see on the net is unclear. Maybe you have a video for that?
GREAT video the best course on butterfly. I have a quest there if that is the cases I can Long or Short the butterfly on Call or put , How can I choose to do the Call butterfly or put butterly
Really Nice, simple and informative video, so you suggest in in short butterfly, one short put in the money , 2 long put at money and one more short put out of the MONEY, do you also trained or worked for daily basis tips and if so what are you charges, thanks again. Farhan
great video. learn much from this. what are the diffrences beetwen long/short call and put? what condition in market should trade in call and in what condition we should trade in put?
Thanks for the comment. I recommend checking out my free options trading education here: tradeoptionswithme.com/options-trading-education I think my free options trading foundation masterclass or beginner course would help you most. I could answer your question here, but I really think that it would make much more sense for you to check out the resources that I just mentioned. There I explain these concepts much more in depth and with visuals. If those resources don’t help, let me know as soon as possible.
Thank you for the high quality content! what route would you propse for a mature wannabe trader that already has a solid understanding of the theoretical foundations and wants to trade options for income, slowly, trading a few positions per month, a couple of hours per week?
Thanks for the comment. If you are already familiar with the theory, it is time to dive into the practice. So what I’d recommend is signing up to a broker platform and getting familiar with it (tastyworks is my favorite broker). Find out how everything works so that you can use all the features without a problem. Furthermore, you could start paper trading or alternatively, trading with very small positions just to get used to trading with real risk. But before you start trading with real position sizes, you should have some sort of strategy. If you don’t have a strategy, you won’t become a successful trader. A strategy can be learned from someone else or developed by yourself. I really hope this helps. Let me know if you have any follow-up questions or comments.
It certainly helps and I already have accounts on TT as well as on TOS, the issue is with finding a convincing strategy, I've been following trafers that have different strategies, some are net option sellers, others are buyers, some trade before earnings some after earnings while some don't trade earnings at all.. i've read the important books out there teaching spreads, condors and butterflies, but I am not convinced that any of these systems is profitable and is worth to go trade with. What is your experience with trading options and what worked for you?
There are many different trading strategies that work. But in my experience, just because a strategy works for someone, does not mean that it will work for you. It’s very important to find a strategy that fits your personality and personal preferences. To do this, you could try to change working strategies to fit your situation. You could also check out my article on developing your own strategy: tradeoptionswithme.com/develop-a-trading-strategy
Thanks for your reply, looking at your website I am sure you put in a lot of time and effort to develop the interesting and serious content, I will read it 'cover to cover' :-)
I use this regardless, as I don’t study the market. Example: choose highly active stock - Tesla. BTO 2ATM calls, Sell 1 each 5 pts out on both sides. 4 weeks out. Place trade. Set close at 40% profit. Genius.
wow what a great video! Thank you! my question to you though, can we let these short butterfly spreads expire worthless or do we need to sell at a lower credit. Say, i have a short butterfly with a credit of 3.36. Can i let that expire worthless or buy it back lower?
Thanks for the question. This is totally up to you. You can do both. Either you buy it back for less than you bought it or you let the spread expire worthless. However, I usually recommend closing such positions before expiration. It is often not worth your time (and money) to wait for the last few pennies of profit.
This is just superb, I have been researching "what are monthly income trades rate" for a while now, and I think this has helped. Have you heard people talk about - Eeyarah Mysterious Eradicator - (do a search on google ) ? It is an awesome exclusive guide for discovering how to unlock an effective options trading method to win fast minus the normal expense. Ive heard some awesome things about it and my buddy got amazing success with it.
Does the profit chart look the same whether you do short call butterfly spread or short put butterfly spread? Because I am assuming the profit profile looks the same since you never touched on it in the video. And the same goes for Long Butterfly spreads. Does the chart look the same whether you do a long put butterfly spread or long call butterfly spread?
Awesome explanation I have a question how would a out of the money long butterfly work because when backtested on an options backtester it seems to do quite well over many different markets
Hi Stuart, An Iron fly is the combination of a put and call credit spread, whereas a regular (call) butterfly is the combination of a call debit spread and a call credit spread. Therefore, an iron fly can be opened for a net credit, whereas a regular butterfly is usually opened for a net debit. Typically, they have different Theta (time) and Vega (IV) values as well. I hope this helps.
@@TradeOptionsWithMe Thanks again for the quick and detailed reply. Very helpful. My only follow up to this response, is when would you say is the best time to use one over the other? What are the criteria on choice between them? Thanks for the great content.
@@DroneReed Hi Stuart, Since the risk profiles of the two are so similar, it mainly comes down to personal preference. But here are some aspects that you could/should consider when choosing between the two: 1. Liquidity: Since a regular butterfly is either all calls or all puts, you will have to trade ITM options. These can have a little less liquidity than ATM or OTM options. So I definitely recommend comparing the volume/open interest of the options required for a butterfly to the iron fly options. 2. Adjustment strategies: Depending on your style, you might be familiar with more adjustment strategies for iron condors than for butterflies or vice versa. If you have a preference here, that could be a determining factor. 3. Price: Even though the risk profiles are very similar, there might be some minor differences in max profit/loss. You could compare these to see if one is better than the other. All in all, there really isn't a big difference. But I hope this gives you some ideas about how you could make a choice.
Thanks for your comment. There is a difference between implied and actual volatility. When you trade a short butterfly, you want high actual volatility. However, you don’t want high implied volatility. A short butterfly has a positive Vega. This means it profits from increasing implied volatility. On the flip side, it loses money when implied volatility decreases. Therefore, you want to open a short butterfly spread when IV is low so that it has potential to rise. If you’d enter a short butterfly spread in high IV times and IV starts to fall, you might lose money on the position even if the underlying’s price moves a lot.
Great video. I have a question, why would you prefer short butterfly spreads while in another video you would prefer short iron condor, since from the P/L graph I can see short butterfly works so similar as long iron condor . I would appreciate your reply.
Louis, can u please make a real option trade (any strategy) video start from the set up how u place the order until u take the profit/realized the profit pelase? all your follower must be excited with that video. thanks
The problem is hard to find video on how to close option selling trade, mostly we have to join paid mambership to watch that video (they only show how to place option selling trade focus on tempting max profit not nax risk not how to adjust n take 50% profit).Thanks
I understand. On some of my defined risk short premium trades (e.g. iron condors), I aim for 50% of max profit. If it doesn’t reach that 50% mark, I simply cut the loss a few days before expiration. So that’s a very simple closing procedure. But depending on the situation and strategy this process may vary. So I will try to add details about taking off trades when I create the trade walkthrough video.
TradeOptionsWithMe I mean how we as a seller can get good credit when closing option sell on the broker. example: we get credit $2 and should take profit 50% = $1. How we do it on a real Tasty trade platfrom. last time I made mistake close at cheap price because still confused mindset as a seller. its best u make a matrix diagram on ur website about this. once again thanks Louis.
A general rule to use when rolling is that you should always try to decrease the risk of the trade. This means you would have to roll the short butterfly spread for a net credit. Otherwise, you would increase the overall risk. Unfortunately, you likely won’t be able to roll a losing short butterfly spread for a net credit most of the time. Therefore, it usually doesn’t make too much sense to roll a butterfly spread.
Wouldn't you want to place a short butter spread when you have a high IV environment such as earnings because you know for a fact based on the Expected move it will go outside of the short strikes
So i just setup a butterfly Call option, says thgat Debt is 0 and max loss is 0 with a max profit of 100. i dont understand. so i can place this calll and have nothing to loose but only gain 100 ?
Thanks for the comment. That seems unlikely. I’d recommend manually calculating the max risk/profit to make sure. But note that just because you can set up such a spread, does not mean that you can get filled at such a price.
@@TradeOptionsWithMe thnx for replying, i just noticed the age of the video and you still replied. ill be sure to sub. i used the webull application and thats what it says on the bottom. Im a bit confused. i got into trading like 2 weeks after the GME news came out lol unfortunately i didnt buy any lol
If you’re new to options, I wouldn’t recommend opening any option positions without fully understanding them and the associated risks. If you’re interested, you could check out my free options trading beginner courses here: tradeoptionswithme.com/welcome-to-options/
There isn’t any real significant difference between a call and put butterfly in terms of payoff. Sometimes, you will be able to get a better net price with calls and sometimes with puts. Thus, I recommend comparing different put and call butterflies before opening one.
I just chose 72 Dollars as an example price for the butterfly spread examples. I said that you could open the short butterfly spread for a net credit of $0.72 and the long butterfly spread for a net debit of $0.72. But as the standard contract size of options is 100 and not 1, you have to multiply this number by 100 to get the actual price for one contract. I hope this answers your question. Otherwise, make sure to let me know.
Hi Dan, thanks for your comment. I am unsure about what you mean. A short butterfly most commonly refers to the position with a short ITM and short OTM option and two long ATM options. This is the other way around for long butterflies. The graphs of these strategies are those shown in the video.
It doesn´t work. You will never find spreads with the same premium, so the graphic will not be symmetric. I simulated this with many stocks. This is somehow a misleading video.
I stole them? First of all, I think you mean SkyViewTrading, not skytrader. Secondly, does that mean that every channel that makes whiteboard videos stole their videos from them?
@@TradeOptionsWithMe It has nothing to do with the white board and everything to do with the same videos they provide. It's the same charts, same font , same animation, same images in the same sequence they have on their video library. It's nice that you're trying to explain option spreads, but acknowledge that these aren't you're videos instead of claiming them as your own.
Thanks for the feedback. However, the reason why the animations and some of the images are similar is that we use the same 3rd party software called Videoscribe (which provides the images and the animations). So I am simply using the images of the Videoscribe library which are limited to a certain amount. So obviously I will use some of the same images as other people that use the same software. Furthermore, the videos are from my own ideas, my own time put in, my own scripts, my own style etc. Finally, I am an affiliate partner of SkyViewTrading and actually actively promote them.
Wouldn't you want to place a short butter spread when you have a high IV environment such as earnings because you know for a fact based on the Expected move it will go outside of the short strikes
Thanks for your comment. First of all, it is never guaranteed that the price will go anywhere. Furthermore, the Greek Vega of a short butterfly spread is positive. This means that the butterfly spread would lose money from decreasing IV and make money from increasing IV. Events such as earnings usually are followed by a sharp IV drop which would have a quite negative effect on the short butterfly spread’s profit and loss. So even if the underlying’s price would move beyond the short strikes, the drop in IV might lead to no or only a tiny overall gain. Last but not least, if you open a short butterfly spread in a high IV environment, you won’t be able to collect as much credit which would increase your risk and decrease your max profit. In a low IV environment, you would be able to profit from an increase in IV and the payoff diagram would be much better than in a high IV environment. I really hope this helps. Let me know if you have any other questions or comments.
Great video, best explanation on butterfly i have seen, clear and concise without any information overload. I like how all the applicable parts are covered such as entering a trade base on IV rank and also explanation of the greeks to help us in evaluating our position. Keep up the good work
Thank you so much for explaining so clearly. Not the video and i sincerely appreciate the effort you put in.
I just noticed this video is done in 2017. But I wached so many videos and I believe this is still the best video for Butterfly!
Thanks for the positive feedback!
The best course on butterfly. Glad to have actually seen your video carefully today.
A very, very good video. Especially showing the difference between long and short butterfly spreads.
The best explanation of butterflies I've seen.
I am very happy to hear that you enjoyed the video.
Excellent , could not have been any better. U r a kind hearted genius.
Wow, your explantion is incredible. Just one point on long butterfly is that is it the same as the Iron butterfly, i have traded a couple recently the advantage of them is that they are very cheap so, and your losses are very small if you lose but if you only stay a few days 5/10 you will most likely win, and since you bet very little it is easy to double your money by making little gains.
I appreciate your in depth work. No one explains it the way you just did, thank you 👏👏
Thanks for the comment. But note that there is a slight difference between an iron butterfly and a long butterfly.
Dude that handwriting is incredible and precise 😁
Best butterfly explanation on RUclips. Thanks options with me. liked and subscribed homie.
Thank you!
Agree with other comments..your channel is the best at explaining options
Thank you very much!
thank you very much. I struggle to understand how to use this strategy in O DTR or 1 DTE. What I see on the net is unclear. Maybe you have a video for that?
GREAT video the best course on butterfly. I have a quest there if that is the cases I can Long or Short the butterfly on Call or put , How can I choose to do the Call butterfly or put butterly
Really Nice, simple and informative video, so you suggest in in short butterfly, one short put in the money , 2 long put at money and one more short put out of the MONEY, do you also trained or worked for daily basis tips and if so what are you charges, thanks again. Farhan
great video. learn much from this. what are the diffrences beetwen long/short call and put? what condition in market should trade in call and in what condition we should trade in put?
Thanks for the comment. I recommend checking out my free options trading education here: tradeoptionswithme.com/options-trading-education
I think my free options trading foundation masterclass or beginner course would help you most. I could answer your question here, but I really think that it would make much more sense for you to check out the resources that I just mentioned. There I explain these concepts much more in depth and with visuals.
If those resources don’t help, let me know as soon as possible.
Perfectly explained. Thank you. A tip to viewers - watch at 1.25-1.5x speed haha
Thanks for the feedback. I can’t blame you for that advice. I hope my newer videos are better when it comes to the speed :)
very nice simple explanations others make it very complicated
Thanks for the positive feedback.
Thank you for the high quality content! what route would you propse for a mature wannabe trader that already has a solid understanding of the theoretical foundations and wants to trade options for income, slowly, trading a few positions per month, a couple of hours per week?
Thanks for the comment. If you are already familiar with the theory, it is time to dive into the practice. So what I’d recommend is signing up to a broker platform and getting familiar with it (tastyworks is my favorite broker). Find out how everything works so that you can use all the features without a problem. Furthermore, you could start paper trading or alternatively, trading with very small positions just to get used to trading with real risk.
But before you start trading with real position sizes, you should have some sort of strategy. If you don’t have a strategy, you won’t become a successful trader. A strategy can be learned from someone else or developed by yourself.
I really hope this helps. Let me know if you have any follow-up questions or comments.
It certainly helps and I already have accounts on TT as well as on TOS, the issue is with finding a convincing strategy, I've been following trafers that have different strategies, some are net option sellers, others are buyers, some trade before earnings some after earnings while some don't trade earnings at all.. i've read the important books out there teaching spreads, condors and butterflies, but I am not convinced that any of these systems is profitable and is worth to go trade with.
What is your experience with trading options and what worked for you?
There are many different trading strategies that work. But in my experience, just because a strategy works for someone, does not mean that it will work for you. It’s very important to find a strategy that fits your personality and personal preferences. To do this, you could try to change working strategies to fit your situation. You could also check out my article on developing your own strategy: tradeoptionswithme.com/develop-a-trading-strategy
Thanks for your reply, looking at your website I am sure you put in a lot of time and effort to develop the interesting and serious content, I will read it 'cover to cover' :-)
this was very educational for me
I did try this Long butterfly strategy.. but found difficult to exit it? What's the best way to exit from trade for butterfly?
Excellent video. Thank you!
Very informative and great video! I like this class and feel is the best for the Butterfly!
I use this regardless, as I don’t study the market. Example: choose highly active stock - Tesla. BTO 2ATM calls, Sell 1 each 5 pts out on both sides. 4 weeks out. Place trade. Set close at 40% profit. Genius.
wow what a great video! Thank you! my question to you though, can we let these short butterfly spreads expire worthless or do we need to sell at a lower credit. Say, i have a short butterfly with a credit of 3.36. Can i let that expire worthless or buy it back lower?
Thanks for the question. This is totally up to you. You can do both. Either you buy it back for less than you bought it or you let the spread expire worthless. However, I usually recommend closing such positions before expiration. It is often not worth your time (and money) to wait for the last few pennies of profit.
This is just superb, I have been researching "what are monthly income trades rate" for a while now, and I think this has helped. Have you heard people talk about - Eeyarah Mysterious Eradicator - (do a search on google ) ? It is an awesome exclusive guide for discovering how to unlock an effective options trading method to win fast minus the normal expense. Ive heard some awesome things about it and my buddy got amazing success with it.
Does the profit chart look the same whether you do short call butterfly spread or short put butterfly spread?
Because I am assuming the profit profile looks the same since you never touched on it in the video.
And the same goes for Long Butterfly spreads. Does the chart look the same whether you do a long put butterfly spread or long call butterfly spread?
clear, concise verbage with excellent diagrams
Thanks!
Great explanation, I copied down that Greek chart, thank you very much!
Nice introduction
Awesome explanation I have a question how would a out of the money long butterfly work because when backtested on an options backtester it seems to do quite well over many different markets
very helpfull video how to open butterflys but i have yet to see a actual video how to close these butterflys?????
yes, the best butterfly spread explained , thank you !!!
You are very welcome. It’s great to hear that you enjoyed the video.
What is the difference of a regular butterfly, compared to an Ironfly strategy?
Hi Stuart,
An Iron fly is the combination of a put and call credit spread, whereas a regular (call) butterfly is the combination of a call debit spread and a call credit spread. Therefore, an iron fly can be opened for a net credit, whereas a regular butterfly is usually opened for a net debit. Typically, they have different Theta (time) and Vega (IV) values as well.
I hope this helps.
@@TradeOptionsWithMe Thanks again for the quick and detailed reply. Very helpful. My only follow up to this response, is when would you say is the best time to use one over the other? What are the criteria on choice between them? Thanks for the great content.
@@DroneReed Hi Stuart,
Since the risk profiles of the two are so similar, it mainly comes down to personal preference. But here are some aspects that you could/should consider when choosing between the two:
1. Liquidity: Since a regular butterfly is either all calls or all puts, you will have to trade ITM options. These can have a little less liquidity than ATM or OTM options. So I definitely recommend comparing the volume/open interest of the options required for a butterfly to the iron fly options.
2. Adjustment strategies: Depending on your style, you might be familiar with more adjustment strategies for iron condors than for butterflies or vice versa. If you have a preference here, that could be a determining factor.
3. Price: Even though the risk profiles are very similar, there might be some minor differences in max profit/loss. You could compare these to see if one is better than the other.
All in all, there really isn't a big difference. But I hope this gives you some ideas about how you could make a choice.
@@TradeOptionsWithMe Thank you for a most thorough answer, and helpful insight. Appreciate your time and effort in answering.
Why would you want lower implied volatility with a short butterfly, when you want the price to move for max profitability?
For example, right now, the market is quite volatile. So, would I not want to engage in short rather than long butterfly options?
Thanks for your comment. There is a difference between implied and actual volatility. When you trade a short butterfly, you want high actual volatility. However, you don’t want high implied volatility. A short butterfly has a positive Vega. This means it profits from increasing implied volatility. On the flip side, it loses money when implied volatility decreases. Therefore, you want to open a short butterfly spread when IV is low so that it has potential to rise. If you’d enter a short butterfly spread in high IV times and IV starts to fall, you might lose money on the position even if the underlying’s price moves a lot.
@@TradeOptionsWithMe ohh I was going to ask the same question, but now I get it thanks!
@@teztradef1313 Great!
Good discussion. Takes a lot of capital to open a long butterfly spread. Not sure about a short butterfly spread.
Great and very informative video Thank s a lot
Very good video, great info!! Thanks!
Your simply awesome
Do you need collateral (100 shares or money to buy 100 shares) for this strategy?
No, but you need a margin account to be able to sell options
Very informative, nice video!
Thank you!
Great video. I have a question, why would you prefer short butterfly spreads while in another video you would prefer short iron condor, since from the P/L graph I can see short butterfly works so similar as long iron condor . I would appreciate your reply.
Louis, can u please make a real option trade (any strategy) video start from the set up how u place the order until u take the profit/realized the profit pelase? all your follower must be excited with that video. thanks
Thanks for the suggestion, Harry. That sounds like a great idea. I will definitely try to create such a video sometime in the future.
The problem is hard to find video on how to close option selling trade, mostly we have to join paid mambership to watch that video (they only show how to place option selling trade focus on tempting max profit not nax risk not how to adjust n take 50% profit).Thanks
I understand. On some of my defined risk short premium trades (e.g. iron condors), I aim for 50% of max profit. If it doesn’t reach that 50% mark, I simply cut the loss a few days before expiration. So that’s a very simple closing procedure.
But depending on the situation and strategy this process may vary. So I will try to add details about taking off trades when I create the trade walkthrough video.
TradeOptionsWithMe I mean how we as a seller can get good credit when closing option sell on the broker. example: we get credit $2 and should take profit 50% = $1. How we do it on a real Tasty trade platfrom. last time I made mistake close at cheap price because still confused mindset as a seller. its best u make a matrix diagram on ur website about this. once again thanks Louis.
I will try to show that when I make the video.
Fantastic video. Subscribed
Thanks a lot!
Can you explain when and if makes sense at all to roll a short butterfly spread?
A general rule to use when rolling is that you should always try to decrease the risk of the trade. This means you would have to roll the short butterfly spread for a net credit. Otherwise, you would increase the overall risk. Unfortunately, you likely won’t be able to roll a losing short butterfly spread for a net credit most of the time. Therefore, it usually doesn’t make too much sense to roll a butterfly spread.
Wouldn't you want to place a short butter spread when you have a high IV environment such as earnings because you know for a fact based on the Expected move it will go outside of the short strikes
Great. Thanks.
So i just setup a butterfly Call option, says thgat Debt is 0 and max loss is 0 with a max profit of 100. i dont understand. so i can place this calll and have nothing to loose but only gain 100 ?
Thanks for the comment. That seems unlikely. I’d recommend manually calculating the max risk/profit to make sure. But note that just because you can set up such a spread, does not mean that you can get filled at such a price.
@@TradeOptionsWithMe thnx for replying, i just noticed the age of the video and you still replied. ill be sure to sub. i used the webull application and thats what it says on the bottom. Im a bit confused. i got into trading like 2 weeks after the GME news came out lol unfortunately i didnt buy any lol
If you’re new to options, I wouldn’t recommend opening any option positions without fully understanding them and the associated risks. If you’re interested, you could check out my free options trading beginner courses here: tradeoptionswithme.com/welcome-to-options/
Odd question but did you use doodly to make this video?
Great video. It would be helpful if you actually wrote which options that you’re buying and selling as you explained it.
Thanks for the feedback. I will keep this in mind for future videos.
8:14 short BF _ just want price to move. Long BF looking for range bound prices.
Is there no difference if you use Puts vs Calls on the Butterfly?
There isn’t any real significant difference between a call and put butterfly in terms of payoff. Sometimes, you will be able to get a better net price with calls and sometimes with puts. Thus, I recommend comparing different put and call butterflies before opening one.
@@TradeOptionsWithMe Thank you for the prompt reply, I have been learning so much from your channel. Please keep posting these great videos.
THANK YOU!
good explanation...really appreciated..
Thank you
now i got the answer on why my butterfly moves so slow...i pick a wrong shape of butterfly..lol
Thanks
Eccellent. 🎉🎉🎉
Amazing ❤️
Super
Good Explanation..
Thanks!
excellent VIDEO
Thank you! I really appreciate it.
thank tou
Hey im a breeder of common mormon or papillio polytes. Where can i sell this and hoe much? Thankyou
🤔🤔🤔
Thank you, James Bond supervillain. :) Just joking. Say hi to the white kitty.
Yes fine young Ms. Kitty!
May I know how do u get 72 dollars from ?
I just chose 72 Dollars as an example price for the butterfly spread examples. I said that you could open the short butterfly spread for a net credit of $0.72 and the long butterfly spread for a net debit of $0.72. But as the standard contract size of options is 100 and not 1, you have to multiply this number by 100 to get the actual price for one contract.
I hope this answers your question. Otherwise, make sure to let me know.
Put this at 1.25 speed. You'll thank me later
I think this tutorial is wrong! Are you sure that you haven't switched the strategies? The graphs look like they have been switched!
Hi Dan, thanks for your comment. I am unsure about what you mean. A short butterfly most commonly refers to the position with a short ITM and short OTM option and two long ATM options. This is the other way around for long butterflies. The graphs of these strategies are those shown in the video.
@@TradeOptionsWithMe You switched the titles!
It doesn´t work. You will never find spreads with the same premium, so the graphic will not be symmetric. I simulated this with many stocks. This is somehow a misleading video.
This is wrong! The short butterfly you are paid so the point should be above the zero line. the graphs are wrong!
I guess im an idiot. i watched this entire video and paid attention and i still dont understand what a butterfly is.
sorry for spam my computer glitched
You totally stole these videos from skytrader.
I stole them?
First of all, I think you mean SkyViewTrading, not skytrader. Secondly, does that mean that every channel that makes whiteboard videos stole their videos from them?
@@TradeOptionsWithMe It has nothing to do with the white board and everything to do with the same videos they provide. It's the same charts, same font , same animation, same images in the same sequence they have on their video library. It's nice that you're trying to explain option spreads, but acknowledge that these aren't you're videos instead of claiming them as your own.
Thanks for the feedback. However, the reason why the animations and some of the images are similar is that we use the same 3rd party software called Videoscribe (which provides the images and the animations). So I am simply using the images of the Videoscribe library which are limited to a certain amount. So obviously I will use some of the same images as other people that use the same software. Furthermore, the videos are from my own ideas, my own time put in, my own scripts, my own style etc.
Finally, I am an affiliate partner of SkyViewTrading and actually actively promote them.
Next time, please speak louder
Ok, thanks for your feedback. I appreciate it.
Good job man, thank u
You’re very welcome!
Wouldn't you want to place a short butter spread when you have a high IV environment such as earnings because you know for a fact based on the Expected move it will go outside of the short strikes
Thanks for your comment. First of all, it is never guaranteed that the price will go anywhere. Furthermore, the Greek Vega of a short butterfly spread is positive. This means that the butterfly spread would lose money from decreasing IV and make money from increasing IV. Events such as earnings usually are followed by a sharp IV drop which would have a quite negative effect on the short butterfly spread’s profit and loss. So even if the underlying’s price would move beyond the short strikes, the drop in IV might lead to no or only a tiny overall gain.
Last but not least, if you open a short butterfly spread in a high IV environment, you won’t be able to collect as much credit which would increase your risk and decrease your max profit.
In a low IV environment, you would be able to profit from an increase in IV and the payoff diagram would be much better than in a high IV environment.
I really hope this helps. Let me know if you have any other questions or comments.