This post is another in a series that we will be publishing which track the hypothetical performance of broken wing butterfly trades selected by Greg Loehr of Optionsbuzz.com.
There’s only a little more than an hour left in the trading day and the expiration of the SPX weekly options, but there’s still plenty of action left in the hypothetical broken wing butterfly that I’ve been tracking in this blog. As I write this the SPX is printing 1385. The butterfly I identified last week is the 1385-1380-1370 put fly for a $0.35 credit. Using the mark of the current option quotes the spread could be sold for a 75-cent credit, although a certain amount of slippage would have to be involved.
At that price the trade is producing a $1.10 profit on the opening risk of $4.65. This is the credit to open, credit to close scenario. For those without a calculator handy, that’s a return of 24%. But the day ain’t over yet, and he trade could still conceivably lose, or potentially generate more profits than where it’s at right now.
As I mentioned yesterday, the risk graph at this point is meaningless and this is where many of the nuances of the trade come in to play. But taking the time to learn those nuances can certainly pay off for the times like this where the profit of the trade can dwarf the entry credit. I’ll be back after the close to give you the final result.
Trade safe!
Greg Loehr
Optionsbuzz.com
Please note: Hypothetical computer simulated performance results are believed to be accurately presented. However, they are not guaranteed as to accuracy or completeness and are subject to change without any notice. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Since, also, the trades have not actually been executed; the results may have been under or over compensated for the impact, if any, of certain market factors such as liquidity, slippage and commisions. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any portfolio will, or is likely to achieve profits or losses similar to those shown. All investments and trades carry risks.
No relevant positions.
