I've got it! I need input on my Iron Butterfly strategy

S8 - Strategies butterflies
1

Here’s my idea. I’m about to demo this. The only thing I’m not sure about is when I want to enter… 6pm or wait until after 9:30am when it makes its initial move & try to leg into the butterfly one wing at a time. Here’s the plan. I need some input…

I want to get in at SELL 26-28 and BUY 72-74. In the example below, I crunched the numbers for a 27/73 butterfly. I calculated the risk if you let it expire & win one wing, the reward if you win both wings, the reward if you have your stop trigger prices set at 47/53 (-20), and the total you need to enter the trade.

“Risk at expiration” is calculated for $2.70 in commissions, because you wouldn’t pay for the losing side. You would get in on both sides & win one side.

“Reward” is calculated for $3.60 in commissions, because you would pay to get in on both sides & win them both.

“Stops @ 47/53” is calculated for $3.60 in commissions, because you would pay for the stop on one side & win the other side.

“$ needed to enter” is calculated for $1.80 in commissions, because you just need the money to get in on both sides.

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This strategy is for the DAILY binary contracts only!!! I want to get super wide strikes. The next image highlights an example of the strikes I would want to enter with a working order at 27 & 73 (looking at the NQ).

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Another good thing about this strategy is if one of your stops is hit, I gave it a full 3.25 of room to still be in the positive after commissions. They can get hit at 50.25 or 49.75 & you still don’t lose anything.

ANOTHER IMPORTANT NOTE: I would definitely want to watch the market around 4pm. If you think the market is a little too close for comfort on one side, LIQUIDATE it!!! You would still be in profit overall (even better than the 47/53) & it would eliminate taking the max loss if it expires on the wrong side of the strike after you hit the dreaded “dark zone.”.

Avoid the obvious, like NFP or other big news events.

I want to make this as foolproof as possible. I really want to have SUPER wide strikes, so it’s extremely difficult for both stop triggers to be hit.

What do you all think of this???

2

It’s working right now, but I already have a couple of things to mention from this demo trade:

  1. I put my working orders in at 3:30am & only got filled on one side.

  2. The side that was filled was already in jeopardy before 9:30.

I absolutely loved how wide my strikes were when I was doing 80-85 and 15-20… but those prices can hurt you when one side gets too close. I have to live with strikes just 40-48 points apart.

I think the best way to do this is to leg into them after the open. If it spikes up, look for a sell around $26-$28. If it spikes down, look for a buy around $72-$74. It can also be frustrating when you see a strike you want, but you’re not sure if it’s going to reach your price before it turns around. This is still going to be tricky.

ALSO- I guess you can’t pick your price to get out with the stop trigger. I set mine 2 full points inside the butterfly on both sides.

ANOTHER PROBLEM: When I access Nadex on my phone, it logs me out on my computer… so the stop trigger orders are no longer valid. That’s a problem!

3

Now my problem is I can’t get a daily butterfly on the US Tech 100 that’s 40 points wide. I used to be able to do that. In my price range, the best I’m seeing every day now is 12 one way & 12 the other way. I swear Nadex is intentionally designed to make it impossible to have a strategy that works consistently. ALL I ASK is they be consistent. If I can get 40 point spreads in my butterfly one day, I should be able to do it on future days as well… AT LEAST ONCE!!! Look at my reply above- 44 points! Why haven’t I seen that since??? I’m trying to take my strategy live now, but I’m too scared to enter when my strikes are too close to the indicative.

I’m so freaking sick of waiting. I want to make $ now. 25 years of trying everything imaginable. This is it. I have to make this work somehow.

4

I’m not making light but …

This is why the apex team says you need to learn different strategys.

If you go hunting for buffalo and that’s all you are armed for and that’s all you have trained for, you may starve in a field of turkeys.

5

My strategy could work every time if Nadex would stay consistent with their pricing. I went back & I saw nothing that would’ve made them price the binaries better when I had a 44 point difference between butterfly strikes. My idea is genius if you can get my price range about 40 points apart. If it wanders too far one way, you exit the bad wing & the good wing more than makes up for it. When the strikes are too close, you risk losing the other wing after exiting one side.

I think everyone should boycott Nadex until they give us reasonable prices consistently. It’s ridiculous when every single strategy I come up with is the equivalent to a coin flip gamble trade.

6

Yes, Bill, if you log into your account on your phone it will kick you out on the stop trigger. You may want to look at installing Teamviewer on your phone to be able to see your home computer remotely to check positions. As Iv changes , news, seasonality etc, it will have an effect on the price of binary strikes. Just like regular options. So it will not always be consistent pricing each day or year around etc. Keep us updated on your tests. I think I would agree, if doing dailies, I would leg in as it goes that direction to get higher strikes and better prices on the bigger width etc. Keep it up man! Way to dig in!

7

I’ve tried to leg into my strikes & I only get filled on one side. I’ve also tried to leg into ridiculously far strikes, thinking if I get filled on one side, I might not have to worry about losing that side & I could always do the other side later. I never get filled on those.

I wish my studies would yield consistent strike prices. That’s why I make screen captures. I always figured if I could find certain prices, then that must be the norm. Here is a screen capture from August 3rd. Imagine my excitement when I found strikes 40 points apart on the US Tech 100 in my price range. Even if it wanders too far one way, I was planning on getting out on the “bad” side & still coming out of the trade ahead. I wanted to take it live this week, but I haven’t seen strike prices like this since. They are 24 points apart at best. Needless to say, I haven’t gone live yet with this strategy.

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