It is my pleasure to come on this forum. I have been learning about Options Trading for about 18 months. However, I have been active in my leaning process for the past 10 months. Based on my friend's counsel, I am thinking of mastering the Broken Wing Butterfly (BWB) strategy. I seem to understand the basics and mechanics of the BWB trade. In addition, I have learned from from scholars like Dan Harvey, Tom Nunamaker, Andrew Falde, Ryan Simmen and several others. Nevertheless, there is something I am not clear about. May I please know how to choose the best strikes for a BWB trade if we plan to trade the SPY or SPX with a 70 to 80 DTE? I will be glad to know how to use deltas to select these strike prices. Any idea based on practical experience or back testing will be appreciated. Thanks.
In general the "danger zone" is the short strike of the BWB so placing the short strike's distance first is important. You'll find that round numbers of standard deviations come up frequently in Tom's videos. Since 1 SD reflects about a 68% probability this is a good starting point for strike placement. The ToS platform has good tools for seeing this.