{"id":18400,"date":"2012-04-13T15:41:05","date_gmt":"2012-04-13T19:41:05","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=18400"},"modified":"2023-04-18T15:55:15","modified_gmt":"2023-04-18T19:55:15","slug":"aapls-in-the-bag","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/aapls-in-the-bag","title":{"rendered":"AAPL’s in the bag"},"content":{"rendered":"
\n

This post is another in a series that we will be publishing over the next month , tracking the hypothetical performance of broken wing butterfly trades selected by Greg Loehr of Optionsbuzz.com.<\/em><\/p>\n

If you’ve been watching this hypothetical AAPL 610-605-595 put butterfly that expires today, then you’ve seen how dynamic this strategy really is. \u00a0With the sell off down towards the body of the fly, this \u00a0position has traded anywhere from a hypothetical\u00a020-cent profit up to a $1.70 profit, and there’s still more than two hours to go. \u00a0The interesting thing is that even though AAPL traded below the short strike of 605, the trade didn’t enter a hypothetical loss.<\/p>\n

This afternoon the hypothetical butterfly could have been closed for a credit of $1.50 which comes to a $1.55 profit after factoring in the 5-cent hypothetical entry price. \u00a0So over the one-week time frame for this example, on a risk of $4.95, this trade returned a hypothetical\u00a0profit of 31%. \u00a0That’s calculated by taking the projected profit of $1.55 and dividing it by the risk of $4.95. \u00a0We’ve now tracked four hypothetical broken wing butterfly trades in the past several weeks, each one producing hypothetical profits of 1%, 1%, 6% (SPX) and 31% respectively; all over one-week time frames.<\/p>\n

Going back to SPX now I’m going to be tracking over the next week a hypothetical April 1355-1350-1340 put fly (ten spreads) with an entry price of a 30-cent credit. \u00a0This setup is similar to the previous example we followed on the SPX. \u00a0If the market rallies into expiration week, then these puts will all expire worthless and the hypothetical profit at that time would be the 30-cent credit divided by the maximum risk of $4.70 which comes to 6.4%. \u00a0The maximum profit is theoretically $5.30.<\/p>\n

\"\"<\/a>

SPX Broken Wing Butterfly Risk Graph April Expiration<\/p><\/div>\n

When looking at an example such as this I believe it’s important to “preview” how the trade reacts if the market moves too<\/em> quickly in the direction of the fly – which is main thing to consider with this strategy. \u00a0From my analysis it seems that this trade should be able to withstand a 2-standard deviation move, which is about $20, before getting close to hypothetically losing 20% of the risk. \u00a0But of course, time is going to only make that better.<\/div>\n
Make sure you check back on Monday, not only to see if there are any updates to this hypothetical SPX fly, but I might be inclined to go back to AAPL again. Have a great weekend!<\/div>\n

Trade safe!<\/p>\n

Greg Loehr<\/p>\n

Optionsbuzz.com<\/p>\n

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.<\/em><\/p>\n

Risk Disclaimer<\/a><\/p>\n

No relevant positions.\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

This post is another in a series that we will be publishing over the next month , tracking the hypothetical performance of broken wing butterfly trades selected by Greg Loehr of Optionsbuzz.com. If you’ve been watching this hypothetical AAPL 610-605-595 put butterfly that expires today, then you’ve seen how dynamic this strategy really is. \u00a0With the sell off down towards … Read More<\/a><\/p>\n","protected":false},"author":904,"featured_media":18401,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1377],"class_list":["post-18400","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-comments-2","tag-l"],"yoast_head":"\nAAPL's in the bag | 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\/aapls-in-the-bag\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"AAPL's in the bag | SMB Training\" \/>\n<meta property=\"og:description\" content=\"This post is another in a series that we will be publishing over the next month , tracking the hypothetical performance of broken wing butterfly trades selected by Greg Loehr of Optionsbuzz.com. 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Read More\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.smbtraining.com\/blog\/aapls-in-the-bag\" \/>\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=\"2012-04-13T19:41:05+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-04-18T19:55:15+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2012\/04\/spx_041312.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"712\" \/>\n\t<meta property=\"og:image:height\" content=\"334\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Greg Loehr\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@smbcapital\" \/>\n<meta name=\"twitter:site\" content=\"@smbcapital\" \/>\n<meta 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Loehr began his career on the floor of the Chicago Mercantile Exchange in Susquehanna\u2019s FX futures and options operation as part of a team supporting five currency option traders, as well as the firm\u2019s traders on the Philadelphia Stock Exchange and the London spot currency trading desk. His professional training came in the form of game theory, quantitative option theory and pricing, and position risk management, and he spent time training with the firm\u2019s founding partners before going on to trade the firm\u2019s capital for the next three years as an equity options market maker on the floor of the Chicago Board Options Exchange. Loehr co-founded Third Millennium Trading, LLC with a Susquehanna colleague after leaving that firm in 1995. He continued to trade on the floor of the CBOE and co-managed the firm's trading desk. He also was responsible for training the firm\u2019s market makers to trade the company\u2019s capital. 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Loehr began his career on the floor of the Chicago Mercantile Exchange in Susquehanna\u2019s FX futures and options operation as part of a team supporting five currency option traders, as well as the firm\u2019s traders on the Philadelphia Stock Exchange and the London spot currency trading desk. His professional training came in the form of game theory, quantitative option theory and pricing, and position risk management, and he spent time training with the firm\u2019s founding partners before going on to trade the firm\u2019s capital for the next three years as an equity options market maker on the floor of the Chicago Board Options Exchange. Loehr co-founded Third Millennium Trading, LLC with a Susquehanna colleague after leaving that firm in 1995. He continued to trade on the floor of the CBOE and co-managed the firm's trading desk. He also was responsible for training the firm\u2019s market makers to trade the company\u2019s capital. 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