{"id":15210,"date":"2011-10-31T10:35:15","date_gmt":"2011-10-31T14:35:15","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=15210"},"modified":"2023-04-20T15:37:51","modified_gmt":"2023-04-20T19:37:51","slug":"decembers-rut-bearish-butterfly-trade","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/decembers-rut-bearish-butterfly-trade","title":{"rendered":"December&#8217;s $RUT  Bearish Butterfly Trade"},"content":{"rendered":"<p>One of my favorite options spread trades is the Bearish Butterfly. I developed this trade a number of years ago in recognition of the fact that no matter how much the market may rally, it will eventually experience pullbacks. So an options spread trade, developed to take advantage of these periodic pullbacks should work in most market scenarios. In the very near future, SMB&#8217;s Options Training Program will be offering options traders a video series on exactly how to trade the bearish butterfly in every market condition. I have personally been trading this strategy myself for 4 years now,\u00a0and have been very happy with the results.<\/p>\n<p>Today&#8217;s post is the beginning in\u00a0a series of posts\u00a0 in which we will demonstrate exactly how we\u00a0 are trading\u00a0 the December 2011 Bearish Butterfly so that you can get a feel for the design and flexibility of this trade.\u00a0 I entered the trade 56 days out from the December 2011 monthly options expiration which was last Friday and modified the position, according to our plan, on Monday of this week.<br \/>\nI initiated this trade on Friday October 21, 2011\u00a0 by buying\u00a0 a 2 lot\u00a0\u00a0 630\/680\/730 put butterfly&#8211;behind the market, intentionally. As you will see, during most\u00a0 of this trade we will be staying behind the market, waiting for the inevitable pullback into &#8220;body&#8221; of the butterfly structure.\u00a0 The\u00a0 initial position is shown below:<\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2011\/10\/Dec-55-10-21-11.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-15239\" src=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2011\/10\/Dec-55-10-21-11.png\" alt=\"\" width=\"614\" height=\"257\" srcset=\"\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2011\/10\/Dec-55-10-21-11.png 1306w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2011\/10\/Dec-55-10-21-11-300x125.png 300w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2011\/10\/Dec-55-10-21-11-1024x428.png 1024w\" sizes=\"auto, (max-width: 614px) 100vw, 614px\" \/><\/a><\/p>\n<p>On Monday of\u00a0 last\u00a0 week I added the second butterfly to the trade according to our trading guidelines, again, intentionally behind the market.\u00a0 Specifically, I added\u00a0a two lot\u00a0 650 -700-750 put\u00a0 butterfly. The position was down $215 against a maximum\u00a0 loss of\u00a0 ($3000).\u00a0 The modified\u00a0 position is below:<\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2011\/10\/Dec-55-10-24-112.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-15236\" src=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2011\/10\/Dec-55-10-24-112.png\" alt=\"\" width=\"616\" height=\"289\" \/><\/a><\/p>\n<p>Tomorrow we&#8217;ll discuss how we handled last Thursday&#8217;s monster rally.<\/p>\n<p>As the market continues to play its hand, we have a plan for reacting to almost every scenario that you can think of. Keep checking back with us every day or so\u00a0 and we\u2019ll publish each of our modifications to the trade as the saga of the December Bearish butterfly plays itself out. We look forward to taking this journey together with our loyal readers!<\/p>\n<p>John Locke<\/p>\n<p>Locke In Your Success, LLC<\/p>\n<p><em>The <a href=\"https:\/\/broadcast.smbtraining.com\/smboptions\/\">SMB Options Training Program<\/a> is a twelve month program designed for novice and intermediate level options traders who are seeking an intensive training process to learn how to trade options spreads for monthly income. For more information on this program contact Seth Freudberg: <a href=\"mailto:sfreudberg@smbcap.com\">sfreudberg@smbcap.com<\/a>.<\/em><\/p>\n<div><a href=\"http:\/\/www.cboe.com\/resources\/intro.aspx\" target=\"_blank\" rel=\"noopener\">Risk Disclaimer<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>One of my favorite options spread trades is the Bearish Butterfly. I developed this trade a number of years ago in recognition of the fact that no matter how much the market may rally, it will eventually experience pullbacks. So an options spread trade, developed to take advantage of these periodic pullbacks should work in most market scenarios. In the &#8230; <a href=\"https:\/\/www.smbtraining.com\/blog\/decembers-rut-bearish-butterfly-trade\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":902,"featured_media":15239,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,1402,1584],"tags":[1226,2191,2516,2517,55],"class_list":["post-15210","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-comments-2","category-options-education","category-seth-freudbergs-blogs","tag-bearish","tag-butterfly","tag-decembers","tag-rut","tag-trade"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>December&#039;s $RUT Bearish Butterfly Trade | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/decembers-rut-bearish-butterfly-trade\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"December&#039;s $RUT Bearish Butterfly Trade | SMB Training\" \/>\n<meta property=\"og:description\" content=\"One of my favorite options spread trades is the Bearish Butterfly. I developed this trade a number of years ago in recognition of the fact that no matter how much the market may rally, it will eventually experience pullbacks. So an options spread trade, developed to take advantage of these periodic pullbacks should work in most market scenarios. In the ... Read More\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.smbtraining.com\/blog\/decembers-rut-bearish-butterfly-trade\" \/>\n<meta property=\"og:site_name\" content=\"SMB Training Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/smbcap\/\" \/>\n<meta property=\"article:published_time\" content=\"2011-10-31T14:35:15+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-04-20T19:37:51+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2011\/10\/Dec-55-10-21-11.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1306\" \/>\n\t<meta property=\"og:image:height\" content=\"547\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"options intern\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@smbcapital\" \/>\n<meta name=\"twitter:site\" 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