Butterfly
The following is a typical Butterfly trade. Whenever we place a new trade we immediately update the website with the order information and an e-mail is sent with fill instructions and details about the actual trade.
XYZ (Long Butterfly Call) 2-23-10
This is a Long Butterfly Call on XYZ
BUY Butterfly Call AKAM MAR 10 50/55/60 Call @ 3.00 LMT (debit, the lower the better, keep under 3.10)
Buy to Open MAR 50 Call
Sell to Open MAR 55 Call
Buy to Open MAR 60 Call
Sample Trade: Butterfly
Buy +1 XYZ MAR 10 50 CALL
Sell -2 XYZ MAR 10 55 CALL
Buy +1 XYZ MAR 10 60 CALL
A Butterfly trade is a Bull Call Spread underneath a Bear Call Spread. Therefore it can be ‘legged’ into through buying each spread seperately .
Same Butterfly trade but entered as 2 separate verticals. The same number of contracts are sold on each vertical.
Buy to Open MAR 50 Call
Sell to Open MAR 55 Call
Sell to Open Mar 55 Call
Buy to Open MAR 60 Call
The above trade is based on a $20,000 account, risking 10% of our account. Adjust the number of option contracts that are bought or sold to meet your account criteria.
Whatever the amount is that you invest, always keep an equal amount in cash for possible adjustments. For example, if you have a $20,000 account you should only have $10,000 invested at one time.
We typically place 5 trades per month however we do not guarantee it. If the market does not cooperate we will not simply place a trade to reach our target of 5. It is our preference to spread our risk over 5 trades versus putting all of the money in 1 or 2.
