Strangled Butterfly: Combining A Strangle & A Butterfly When Trading Nadex Binaries


By Darrell Martin

A strangled butterfly is a more complex butterfly trading strategy. Instead of having one upper, selling contract and one lower, buying contract, there are four contracts. There are two buying contracts and two selling contracts, but they aren’t both upper and lower. They are sandwiched or layered together.

For example, let’s suppose the market is trading at 997.5. All of the following strikes are placed on Nadex binaries expiring at the same time. Here is how the strangled butterfly strategy would be executed:

Total for the whole Strangled Butterfly strategy is a net $30 profit potential and $70 risk.

If the market expires above 1005, at or below 990, or at or above 995, and below 1000, the total potential profit of $30 is reached.

If the market is above 1000 and below 1005, or at or below 995 but above 990, this trade would lose the total possible loss of $70.

Here’s how it breaks down:

If the market closes above 1005 Net +$30 Lose $10 on the 990, make $25 on the 995, lose $75 on 1000, make $90 on 1005

If the market closes above 1000 and below 1005 Net -$70 Lose $10 on 990, make $25 on 995, lose $75 on 1000, lose $10 on 1005

If the market closes at or below 1000 and above 995 Net +$30 Lose $10 on 990, make $25 on 995, make $25 on 1000, lose $10 on 1005

If the market closes at or below 995 and above 990 Net -$70 Lose $10 on 990, lose $75 on 995, make $25 on 1000, lose $10 on 1005

If the market closes at or below 990 Net +$30 Make $90 on 990, lose $75 on 995, make $25 on 1000, lose $10 on 1005

If you would like to learn more about this strategy as well as many other trading strategies, go to Apex Investing Institute offers free education, and free access to the Nadex Binary and Spread Scanner Analyzers. Member traders are invited to trade in the rooms, take advantage of trade signal services, have key indicators and access the Apex Forum. The forum content is updated daily and includes over 8000 members. In a supportive learning community of seasoned as well as up and coming traders, traders of all levels learn how to trade Nadex binaries and spreads in depth, as well as futures, Forex, stock and options, and gain an edge for successful trading overall.


How about a video on this one? :grin:


When do you actually use this strategy, it seems very risky to me and the risk vs reward is pretty bad.


Tried an overnight 3:00 Yen. Think I set the TP on the OTM too low. Here’s the trade:

Buy 09/20/15 22:34:10 1 USD/JPY >120.40 (3PM) @ 9 $-9.00 Sell 09/20/15 22:34:26 1 USD/JPY >120.00 (3PM) @ 25.5 $-74.50 Buy 09/20/15 22:35:25 1 USD/JPY >119.60 (3PM) @ 71.25 $-71.25 Sell 09/20/15 22:37:02 1 USD/JPY >119.00 (3PM) @ 94 $-6.00 Sell to Close 09/21/15 04:50:44 1 USD/JPY >119.60 (3PM) @ 92 $92.00 Sell to Close 09/21/15 05:08:27 1 USD/JPY >120.40 (3PM) @ 43 $43.00 Settlement Payout 09/21/15 15:00:20 1 SHORT USD/JPY >120.00 (3PM) @ 25.5 $0.00 Settlement Payout 09/21/15 15:00:20 1 SHORT USD/JPY >119.00 (3PM) @ 94 $0.00


By setting the TP on the OTM @43.00. I set it too low to cover the cost of the other side. Would have needed 23.75 more just to break even. Market closed at 120.587. Which was higher than my BUY strike of 120.40 on the OTM.


What do you want the video to say?

Put on a strangle

Put on a butterfly

Take profit on the strangle to cover the risk on the butterfly

This is often done on 2 different markets.

I will do this on news and strangle a higher volatile pair ie GBP/USD and butterfly a lower volatile pair ie USD/CAD etc… for that specific news announcement.

There are 100’s of strategies you can execute on options. Focus on a couple get those down be profitable add more. Don’t chase every possible strategy combination out there. Add to your clubs that you have mastered.


Darrell, thanks for the using 2 different markets idea.