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How To Trade A Butterfly Spread With No Potential For Loss

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http://optionalpha.com - We'll walk through the steps from our EEM broken wing butterfly position to our final no loss butterfly that we plan to hold through expiration. Trading the embedded vertical option spread is tricky but worth the effort and profit potential to learn now. ================== Listen to our #1 rated investing podcast on iTunes: http://optionalpha.com/podcast ================== Download a free copy of the "The Ultimate Options Strategy Guide": http://optionalpha.com/ebook ================== Still working a day job? Then our "Take 5" segment is for you. 5 mins videos each day on 1 thing you can apply trading options: http://www.youtube.com/playlist?list=PLhKnvfWKsu40z0EnsX0TNqCgUzb8tmM04 ================== Start our 4-part video course (HINT: these videos are NOT posted anywhere else online): http://optionalpha.com/free-options-trading-course ================== Just getting started or new to options trading? Here's a quick resource page we made that you'll love: http://optionalpha.com/start-here ================== Register for one of our 5-star reviewed webinars: http://optionalpha.com/webinars ================== - Kirk & The Option Alpha Team
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Text Comments (7)
Jon K (2 years ago)
what if the market goes the other way?
Option Alpha (2 years ago)
+Ryan Hartung You would buy back your short call and resell a closer strike call. You can do this with a simple vertical spread order at one time.
tung1953 (2 years ago)
+Option Alpha How exactly would you roll down the call side? Thanks.
Option Alpha (2 years ago)
+Jon K Then we'd have to roll down the call side to hedge it.
David Oldenburg (3 years ago)
Am I correct that the stock price was higher than $41 when the original BWF was put in place? In other words, the BWF would become profitable as the stock dropped toward $41?  And, when the stock went higher, it created an opportunity to put on the new vertical with a guaranteed profit? I was trying to figure out where the stock was in price at both points of entry? 
Option Alpha (3 years ago)
Yes it was around $42.50 when we entered it and then it move higher which allowed us to use another spread to guarantee a profit.
Ahmed Essam (4 years ago)
the differences will be taken from your broker as a spread 

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