Quantcast
  1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Kevlar Butterfly Trade

Discussion in 'Options' started by jim, May 30, 2014.

  1. jim

    jim Administrator Staff Member

    On Tuesday, Jun 3, 2014 at 5:00pm ET, I will be presenting my SPX Kevlar butterfly for SMB Capital. Tom Nunamaker can you please put a link so anyone can view this Webex. Thanks Tom.
     
    Last edited by a moderator: May 31, 2014
  2. Chuck Moore

    Chuck Moore Well-Known Member

    Jim, I believe you meant June 3.....is there any way to get a preview :)
     
  3. tom

    tom Administrator Staff Member

    I edited Jim's post Chuck. It should be correct now. I sent an email with a link to the session but I'll re-post it here:

    Jim Riggio is presenting the Kevlar Butterfly trade at the Options Tribe on Tuesday, June 3, 2014 at 5:00pm ET.

    The Kevlar Butterfly trade is a hedged broken wing iron butterfly. Jim will be covering:
    - Design approach
    - Trade setup
    - Trade management (downside and upside adjustments and when to adjust)
    - Trade exit
    - Example trade (back-test and Jim's live trade)

    The meeting will be recorded and Jim's slides will be available to download with the video replay.

    Join Jim on Tuesday at 5:00pm ET by going to
    https://smbu.webex.com/smbu/onstage/g.php?t=a&d=667424541

    If you have problems with the link above, you can go to http://www.webex.com/ and join with:
    Meeting number: 667 424 541

    You can also go to https://smbu.webex.com and "join" the "Options Tribe" event.

    We hope to see you on Tuesday!
     
    Last edited: Jun 2, 2014
  4. RayM

    RayM Well-Known Member

  5. tom

    tom Administrator Staff Member

    Ray, that's the Jeep presentation but it should be similar to Jim's presentation on Tuesday.
     
  6. Chuck Moore

    Chuck Moore Well-Known Member

    I downloaded the Kevlar Butterfly slides and I cannot make heads or tails of the down side adjustment...

    " Buy broken wing Put butterflies, where:
    Long Put wing: buy back original short Put BWIB wing
    Short Put wing: ½ length of original short Put BWIB wing"

    Can you please provide an example?
     
  7. tom

    tom Administrator Staff Member

    Jim still has to add a few examples. I think he's going to step through one or two example months in the live presentation later today. Use the link above at 5:00pm ET today.
     
  8. RayM

    RayM Well-Known Member

    Will the link to the archived recording of last night's Jim Riggio Kevlar (Hedged Broker Wing Iron) Butterflies presentation at SMB-OptionsTribe be post here ?
     
  9. tom

    tom Administrator Staff Member

  10. rrv

    rrv Guest

    I had a hard time following the example given in the recording and I watched it several times. When building the trade, what is your goal? I understand the initial trade, but the add on trades were confusing.

    Also, what is your trigger for making an adjustment and what is the goal of the adjustment? Is it to bring delta back to ~ -5?

    Thanks
     
  11. RayM

    RayM Well-Known Member

  12. rrv

    rrv Guest

    I posted this almost 3 weeks ago and no reply? Bummer :(
     
  13. tom

    tom Administrator Staff Member

    I'll make sure Jim sees this.
     
  14. tom

    tom Administrator Staff Member

    Ray, that looks right but it's Jim's trade so he'll need to take a look.
     
  15. rrv

    rrv Guest

    Still no reply :(
     
  16. jim

    jim Administrator Staff Member

    Ray,

    I have been very busy and I forgot to get back to you... that is, until Tom reminded me.

    Here is what my current SPX July Kevlar 'fly looks like (in thinkorswim Analyze graph.
    SPX_2014-07-11-Analyze__1_.png
    I think that this is a great example of why the "current point in time" Greeks can be VERY misleading and confusing. The BOTTOM LINE is that the management of my Kevlar 'fly different depending on DTE (days to expiration) and IV (both IV levels and Skew).

    Currently my Delta is +27 and my Gamma is -2.5. Looking at my Greeks in a vacuum, one would say that if the market moved down, I would be in a lot of trouble. However, by expiration (which is next Friday morning's opening print) I actually want the SPX to go down by about 15 points to close at the peak of my Butterfly. How can my Greek's same one thing, and my expiration graph say the exact opposite? Confused? I use to be! Perhaps the single most important thing to learn, in order to become a good options trader, is to learn how your currently T+0 line will morph your expiration Graph.

    How will my T+0 line or into my expiration graph? That depends on four factors, namely 1)time decay or theta, 2) SPX price, 3) IV levels and 4) Put Skew.

    If you would like, we can set up a WebEx to review this is more detail.

    Jim
     
    Last edited by a moderator: Jul 11, 2014
  17. meyer99

    meyer99 Well-Known Member

    Jim,
    When you have a chance can you show an example that matches what is in the slides, i.e, two BWIB
     
  18. jim

    jim Administrator Staff Member

    Meyer99, thus would be a good topic to review in Trading Group meeting tomorrow evening at 8:30 PM a Eastern. Why don't you join us and we can discuss with the whole Trading Group.


    Sent from my iPad using Tapatalk
     
  19. meyer99

    meyer99 Well-Known Member

    OK, I will try.
     

Share This Page