StrawberryFields said:
McInnis 03 said:
cptthunder said:
McInnis 03 said:
QS has the makings of it's reversal. I'm in 3/19 60/70/80 butterflies. They were dirt cheap, like $.55 each
There has been pretty significant flow on it that I think cheddar folks could back up?
been trying to do more research and test these options and i could be debited the $.55 corrrect?
on an evenly spaced butterfly that you go long on, yes, you pay to purchase the fly (in this case $.55 x 100) and you would own a 60c and an 80C (both otm on this). You would sell two 70c's and be short those two.
You paid $.55 to enter this transaction and your best hope is for the stock to be at $70 on expiry day, you'd make $10. BUT, if you're inside the wings (> $60 or <$80) you stand to profit, and sometimes very handsomely.
You're protected from assignment in that if for some reason the stock runs to 75 or even 90, and the 70c's you're short get called out......you would exercise your 60c and 80c to cancel it out. (70x2 = 140, 60+80=140)
I have not yet been exercised on my short calls on a fly and I never hold to expiry. I close it prior to expiration. My goal with these is 3x-5x gains or better.
So on these, for example, you're looking to close out at 1.65 - 2.75 before expiration?
I babysit my butterflies. If the trade continues to work in my direction I let it run.
***If this post is on Business and Investing, take it with a grain of salt. I am wrong way more than I am right (but I am less wrong than I used to be) and if you follow me you will be too.***
B&I Key:
ETH - Extended Trading Hours --- RTH - Regular Trading Hours
ORH - Opening Range (1st 30min) High --- ORL - Opening Range Low
R1, R2, R3 - Resistance 1, 2, or 3 --- S1, S2, S3 - Support 1, 2 or 3