Sunday, October 7, 2018

Different kinds of butterflies; Futures pricing doesn't hold up when market closes

First of all, when you think of a butterfly this is what you might think of:
But this past week some of them turned out more like this:
It turns out that a butterfly spread, even with the legs at the .10 delta, aren't nearly as wide as a strangle or iron condor. And some of the futures started to move this past week and didn't stay where they needed to for the butterflies to pay off.

The winners: Gold (/GC), Wheat (/ZW), British Pound (/6B), S&P Futures (/ES) ... 

The losers: Tesla (TSLA),  Soybeans (/ZS) ... 

Not sure yet (I put some of these on with greater than 21 days to expiration): Japanese Yen (/6J), Chipotle (CMG) and a few others.

Anyway, I sold my first strangle this week in oil (/CL) futures ... if this oil price stays between $70 and $81 for about the next 8 or 9 days I should be able to get the 50% of the credit profit I'm looking for. The lower margin requirement for futures makes this absolutely compelling ...

Your Virtual $200,000 account: Not sure this week

I got excited last week when it looked as though the approximately $20K account was up 6.8% for the week ... but now I'm not sure. Clearly things haven't gone as well this week, but the way futures options prices bounce around after the close of the market makes it impossible to really tell what's happening until the market reopens.

So I think you're down about $8K or $10K this week (i.e 4-5%), but not positive. I'll have a better read on this for next week.

More news then ... I will have a better view of this next week.



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