{"id":21942,"date":"2012-11-08T12:02:23","date_gmt":"2012-11-08T17:02:23","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=21942"},"modified":"2023-06-08T11:55:28","modified_gmt":"2023-06-08T15:55:28","slug":"post-election-effects-on-the-broken-wing-butterfly","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/post-election-effects-on-the-broken-wing-butterfly","title":{"rendered":"Post-Election Effects: Unraveling the Broken Wing Butterfly Strategy"},"content":{"rendered":"

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

For those that are watching this hypothetical SPX broken wing butterfly, you saw that even yesterday’s big sell off wasn’t enough to bring the trade even close to a loss exit. \u00a0The biggest loss that I saw the trade hit was about 15-20 cents. \u00a0No where near a loss exit. \u00a0Today the trade stands at a 20-cent profit. \u00a0 Using the options that expire tomorrow, this butterfly is made up with the following put strikes: \u00a01385-1380-1370. \u00a0I identified this trade last week and have been tracking its P\/L based on the entry credit of $0.35.<\/p>\n

But now, without about 1.5 days to go, this is where many of the nuances of this kind of trade come into play including these two: \u00a0theta, and the\u00a0change<\/em> in theta. \u00a0Most options traders understand the greeks, and if you don’t, you need to learn. \u00a0And then \u00a0you need to learn the ‘greeks’ of your greeks.<\/p>\n

One example of that is that theta has a theta. \u00a0That is, theta changes over time – increasing as expiration nears. \u00a0Delta also changes over time. \u00a0With the passage of time ITM option deltas move toward 100 and OTM option deltas move toward zero. \u00a0When do these ‘secondary’ greeks really come in to play? \u00a0As we approach expiration.<\/p>\n

The break even of this butterfly currently stands just about one standard deviation out of the money. \u00a0If you’re only somewhat familiar with broken wings, then you might say this is where it gets dicey. If you’re very familiar, then I think you’d say this is where it can get very interesting. \u00a0This is where you take the risk graph and chuck it because it’s not going to help you figure out how to manage this trade.<\/p>\n

Being able to accurately read up\/down the option chain to analyze price fluctuation while constantly reassessing the changing greeks can give you more insight as to when this trade should be held in order to maximize potential profits, or when to bail because the conditions are just not there. \u00a0With each passing minute this trade gets better and better do to the theta (and the fact that it’s continually increasing); but it’s also close to the edge of having the index price too close for comfort.<\/p>\n

I’ll update this trade again later today or tomorrow. \u00a0If you’d like to learn more about broken wing butterflies, including an hour of coaching where we can discuss the application of this strategy to the weekly options as I have been doing in this forum, click on the banner below.<\/p>\n

Trade safe!<\/p>\n

Greg Loehr<\/p>\n

Optionsbuzz.com<\/a><\/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

No relevant positions.<\/p>\n

Risk Disclaimer<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

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. For those that are watching this hypothetical SPX broken wing butterfly, you saw that even yesterday’s big sell off wasn’t enough to bring the trade even close to a loss exit. \u00a0The … Read More<\/a><\/p>\n","protected":false},"author":904,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[2134,2191,2190,2189,474,2135],"class_list":["post-21942","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","tag-broken","tag-butterfly","tag-effects","tag-election","tag-post","tag-wing","no-post-thumbnail"],"yoast_head":"\nPost-Election Effects on Trading | SMB Training<\/title>\n<meta name=\"description\" content=\"Discover the effects of post-election on the broken wing butterfly strategy. Join us for informed trading!\" \/>\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\/post-election-effects-on-the-broken-wing-butterfly\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Post-Election Effects on Trading | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Discover the effects of post-election on the broken wing butterfly strategy. Join us for informed trading!\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.smbtraining.com\/blog\/post-election-effects-on-the-broken-wing-butterfly\" \/>\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=\"2012-11-08T17:02:23+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-06-08T15:55:28+00:00\" \/>\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 name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Greg Loehr\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/post-election-effects-on-the-broken-wing-butterfly#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/post-election-effects-on-the-broken-wing-butterfly\"},\"author\":{\"name\":\"Greg Loehr\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#\/schema\/person\/eca1238be72d9e66123c20153cbd2158\"},\"headline\":\"Post-Election Effects: Unraveling the Broken Wing Butterfly Strategy\",\"datePublished\":\"2012-11-08T17:02:23+00:00\",\"dateModified\":\"2023-06-08T15:55:28+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/post-election-effects-on-the-broken-wing-butterfly\"},\"wordCount\":613,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#organization\"},\"keywords\":[\"broken\",\"butterfly\",\"effects\",\"election\",\"post\",\"wing\"],\"articleSection\":[\"General Comments\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.smbtraining.com\/blog\/post-election-effects-on-the-broken-wing-butterfly#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.smbtraining.com\/blog\/post-election-effects-on-the-broken-wing-butterfly\",\"url\":\"https:\/\/www.smbtraining.com\/blog\/post-election-effects-on-the-broken-wing-butterfly\",\"name\":\"Post-Election Effects on Trading | SMB Training\",\"isPartOf\":{\"@id\":\"https:\/\/www.smbtraining.com\/blog\/#website\"},\"datePublished\":\"2012-11-08T17:02:23+00:00\",\"dateModified\":\"2023-06-08T15:55:28+00:00\",\"description\":\"Discover the effects of post-election on the broken wing butterfly strategy. 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Loehr earned his J.D. from The John Marshall Law School in Chicago, IL; and he holds the RG146 license from the Australian Securities Investment Commission.\",\"url\":\"https:\/\/www.smbtraining.com\/blog\/author\/gloehrroadrunner-com\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Post-Election Effects on Trading | SMB Training","description":"Discover the effects of post-election on the broken wing butterfly strategy. Join us for informed trading!","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.smbtraining.com\/blog\/post-election-effects-on-the-broken-wing-butterfly","og_locale":"en_US","og_type":"article","og_title":"Post-Election Effects on Trading | SMB Training","og_description":"Discover the effects of post-election on the broken wing butterfly strategy. 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