The butterfly option strategy is one of the most robust and versatile option selling techniques available to option sellers.
When the stock market is calm and quiet – you don’t have to do much at all to quickly realize a profit with these trades. Actually – it’s so easy to make money during ‘normal’ months that when you hit your profit target, it’s really pretty hard to force yourself to take the trade off – you want to just let it keep on running.
But – I suppose the same thing can be said pretty much for all of the ‘neutral’ option trading strategies – for example the calendar spread, the diagonal – and the iron condor. They are all a pleasure to trade in the months where volatility is under control and there is not a lot going on.
What distinguishes the butterfly spread from those other methods – is the way it acts in the more wild and crazy months.
Ever since the crash in late 2008, theta positive, monthly income option trading has been a challenging endeavor to say the least. Sure, all those afore mentioned trading strategies can and have worked – however through many of the months there’s been a lot more work, adjustments, annoyance, and stress involved then in past more peaceful trading times.
Out of all of those strategies (and I’ve had the ‘pleasure’ to trade them all through this period) the butterfly spread – and in particular the iron butterfly and the broken wing – is the one option strategy that has been the most robust – the most consistent – the most reliable – and the one that has given me the least amount of problems – and the most amount of profits.
Sure, I still do like – and trade – the other strategies – like the iron condor, the credit spread, the calendar, etc…
However – the butterfly spread?
Oh good gracious.
Here – I get all teary eyed and emotional just thinking about it.
Hold on – allow me to pull myself together here…
Okay – what it all boils down to is this…
If a good for nothing, toothless, smelly, pants-on-the-ground, gansta kicked open the door to my trading room, shuffled in and demanded at gun point that I choose just 1 trading strategy to trade for the rest of my days – without blinking an eye I’d select the butterfly spread.
Butterfly Spread – I love you.
Oh man…where’s a tissue…
Learn more about Ted and his beloved Iron Condor. Stop by his Butterfly Spread Blog where he will show you his simple step-by-step system to trading this strategy for reliable monthly income.