How are you today? Nothing new here I'll tell ya that.! Life has been so busy lately, so im glad Im able to write. Although results don't show it, I can tell my trading is getting better. HA!
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Cash-and-sweep was $2514.0606
Compared to 2259, which was the previous cash and sweep.58. I only opened one trade for this week, and it looks like my beta weight has been coming along in the right direction. With my beta number on target, the trades I have on make my profit-loss look awful. My portfolio's break even points are not based on the movement of SPY.

I want you to take a guess on what we're chatting about.! Iron Flies, or Iron butterfly options. I want to give some quick pointers on how to build a good Iron Fly
Opened Trades




Week 36 9/3-9/7











Date Made
buying power effect ToSStrategy(Strikes)

Amount of contracts
AMD
September 6th, 2018
sixty
149.95
Put-credit spread(-25x/24)

2

AMD
This was the one and only opening trade for the week. Made this trade wanting that run up to continuously go. Made the trade flawlessly, since it reached its highest price for the year.It reached this high seven days after I placed the trade
Yahoo AMD chart
Trades closed
Security


bp effect thinkorswim
Strategy used
Day of closed tradeAmount of contracts
NKE
September 7th, 2018
100
138.45
Calendar spread (selling the 80-strike Sept 21st and buying the 80-strike October 19th)
Win @ 1.75 (9/7/18)
1
QQQ
8/21/18
62
150.95
IC (-184x/185 -174x/173)
Trade win12 (9/6/18)
2

QQQ
Trade was placed on week 34 At the time, the Q’s seemed to be trading in a consistent pattern. It was trading in a $10 range, with the top being at $187, and the bottom being $175.

Within the iron condor trade, I used the 184 and 185 strikes on the calls.

The put side consisted of selling the 174-strike puts and buying the 173-strike puts. I sold two of these iron condors for31 per spread. Ended up buying these IC's back at12 per iron condor.

NKE
Spread was bought on Aug 7th The calendar spread was made at the 80-strike price. With calendar spreads, traders sell the front month contract and buy the back month contract. Traded this spread for$1.30, while selling it back to the market for $1.75. My thinking was that I needed some bullish exposure, and it looked like $NKE was on the rise up. Fortunately, I was right with the trade, as $NKE climbed higher, fell briefly, and then landed right at 80.



The iron butterfly: How do we build it?
Iron butterflies, what are they exactly? This strategy is basically a straddle with tiny protection First, you sell:
1 ATM Put(same strike)
1 at-the-money call
1 out-the-money call
1 OTM Put( different strike)
A synthetic straddle, using the OTM calls and puts as protection for the "straddle" legs




(Strike price of ATM put) - (credit received)

And

(Strike price ATM call) + (credit received)

So, what's the use of these trades?
We want the stock to stay range-bound. If the stock has been very volatile AND can stay within a range, this is good to use.

This trade is less capital intensive, using the least amount of capital as possible while hoping the stock stays in a price range.

Make sure to use this strategy during high volatile market times When deciding to use this strategy, make sure the stock has very high volatility.

This type of strategy is similar to an iron condor strategy, but it is NOT the same However, here are some interesting differences between the two:

Premium received
Max profit potential
Winning Percentages
ROC( Return on capital)
Capital needed

Of the five bullet points above, the credit received, BP effect, winning percentages are something worth discussing.




Credit Received
The premium taken in with the iron butterflies are higher than iron condors. What's the reason for this? The iron fly is a straddle with protection wings, usually straddles take in higher credits, however, with lower win rates. Compared to the iron condor, which is two credit spreads both below and above the stock price, making the trader take in a lower credit, but have a higher chance of success.

BP Effect(Buying Power effect)
Now, the best part about Iron butterflies is the cost to hold the trade. Whichever strikes you choose, can give the trader an even lower holding cost. Now, just because the cost of the trade is low, does NOT mean that’s your max loss. Make sure to understand the buying power effect properly, when I was first starting out I didn't take this into consideration.

Winning Percentage
This may make the trader think twice of using an iron condor vs an iron fly. The iron fly essentially looks like a more profitable trade, the problem is that it has less success. Why does it win less often? With iron flies, the stock price has to stay within a tighter range, making your range of error smaller.
Adjusting Iron Butterfly Trades
Similar to all the other delta neutral strategies we use, we don't touch the challenged side of the trade. We close out of the uncontested side, and roll up the call or puts for more of a credit. If the Iron fly is challenging the call side of the trade, DO NOT TOUCH IT! If the trade goes against them on the call side, the trader would roll up the put side and take more premium.


The Iron butterfly is a great delta neutral strategy, giving traders a great return on capital, but lower chance of success. You traders should compare capital output in using the condor vs the fly. Remember, the Iron fly doesn’t have as much room for error as the iron condor, making it a harder strategy for a good return.

My beta-weight ended up being 0.28. Excellent after closed out of the calendar spreads. However, my profit-loss diagram still looks ugly. I'll hopefully get around this by selling more iron condors, and getting closer to SPY.

You got anything you want me to talk about in particular? I’m more focused on the smaller account guys, as that’s how I’m going to find my trade pattern.

If you have anything you want for me to talk about, please feel free to comment below or email me!

Follow me on twitter as ill share some ideas with you.
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