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• Archive: https://archive.is/u4xat $57 Get full The Better Butterfly Course - David Vallieres courses.
• “How To Turn a Boring Options Strategy Into An Exciting Explosion of Profits”…It’s the bread and butter trade of most floor traders on the CBOE and heres’s their secret…Dear Trader,“Butterfly spreads are not a high probability trade” I told him.Even though he spent 20 years as a floor trader on the CBOE, I thought I knew better than he did.That’s how stupid I can be sometimes!
• I thought I knew all about butterfly’s!That’s when my mentor told me, “…butterfly spreads were the bread and butter trade of most of the floor traders I knew on the CBOE...”I didn’t say it, but was thinking, “What?
• How?”I studied butterfly spreads extensively and didn’t like them for several reasons:You can’t put them on for a credit, only a debit,You have to hit the short strikes ‘perfectly’ for a decent profit,Yes, they were inexpensive to put on, but they also had a low probability of winning,And finally, butterfly’s are boring!But he said almost every floor trader never put them on as a ‘debit’ spread… they always got them as a credit spread.I said, “Well they are floor traders, so that’s easy”.He said, “Floor traders have to place their trades through the market maker for that stock and the last thing a floor trader wants to do is give another floor trader an edge, so they would never put on a butterfly for them at a credit”.“So how did they do them for a credit?”“That’s the secret,” he said - and he laughed as he said it, teasing me for the answer!I was a bit agitated at his elusiveness, but knew he would finally give me the ‘secret’ so I just stayed silent until he spilled it.“Ok”, he said, …”here’s the deal.
• They don’t enter them as butterfly spreads”He went on to tell me how, actually, you can sometimes get away with sending an order in on a butterfly spread with a credit and get it filled, but it’s rare and only when volatility is high.If volatility is at normal levels, typically you have to get ‘creative’ with the order.So as I listened to how it was possible to create butterfly with a credit - using both methods - it made total sense to me.