Closed out a NEW SPX Butterfly in 3 trading days for just under 20% return

[Steve G]

Closed out this 3 day old Butterfly for a nearly 20% profit:

 

[ChristopherM]

Thanks for sharing Steve. Nice trade - I like the addition of a long call.
I placed a 6 Apr 4080/4040/3990 PUT butterfly for a $45 credit on Thursday last week (3/2). It didn't fill until this morning after Powell spoke. It took a lot of patience to let it sit, waiting for a fill. But I knew that Powell would be speaking today, so I left it alone.
Anyway, hoping for an 8% or more return, but I have a standing stop to get out if SPX hits 3995, which is the strike just outside the tent (bottom side of tent).

 

[Steve G]

Nice going on the patience! It looks like you got a pretty good entry because of your patience. I would not be too concerned about a break below 3995, and maybe just consider adjusting the position instead of taking it off. This should be easy to adjust given your great entry.

 

[ChristopherM]

Ouch, I got stopped out - and at a terrible debit of -4.90! That is sucky! Probably the worst stop in the history of my trading. Perhaps these stops aren't such a good idea after all. I was considering a stop limit, but didn't want to risk missing the limit.

 

[Steve G]

Christopher - this is my personal opinion (and how I teach my students in our trading group at https://aeromir.com/sjg), a properly entered butterfly (which it sounds like you largely had - is VERY forgiving and should never have a STOP on it. Stops in farther out DTE SPX with their wide bid/ask spreads will CRUSH you over time. If anything, you may consider an adjustment to your position - I would personally NEVER put a stop on anything in SPX (unless I was maybe trading 0DTE).

Again - the value of butterflies is that in a BIG market move like today, your butterfly should only swing a small amount in P&L - AND much of that swing is a volatility swing and NOT a price movement swing which also makes a difference in how it will act as the trade moves forward.

If you are not understanding this at this point - you may want to consider signing up for my Deep Dive Butterfly Class starting in 2 weeks and two months of free service through this special offer I set up for Aeromir people. https://www.sjgtrades.com/offers/XVWe6Qob

Please understand I am not trying to PUSH my service - but from what you explained I do truly think that a better understanding of butterflies would greatly benefit you.

 

[ChristopherM]

Thanks for your response Steve. Agreed, a big move in the market should not have made a big difference in the P&L. I underestimated the dangers of using stop orders and it's potential for such bad fills. If anything good comes from this, hopefully someone else is reading this post and learns from my mistake!

I've actually been contemplating buying your course for a while. I may take you up on it. Although I feel like I have an understanding of butterflies, there's probably a lot more I could learn.

 

[Steve G]

Thanks for your response Steve. Agreed, a big move in the market should not have made a big difference in the P&L. I underestimated the dangers of using stop orders and it's potential for such bad fills. If anything good comes from this, hopefully someone else is reading this post and learns from my mistake!

I've actually been contemplating buying your course for a while. I may take you up on it. Although I feel like I have an understanding of butterflies, there's probably a lot more I could learn.

No problem - I am starting the ALL NEW course on Sunday March 19, so if you want to be in on the live recording of the 5 weekly sessions and be able to ask questions, etc. - sign up before we get started. If I can answer any questions for you - ping me at [email protected]

Also - if you have not seen it - if you go to my website you can sign up for a free video on butterfly trading: www.sjgtrades.com

 

[Steve G]

Here are the details on the new course:

Deep Dive Butterfly Class Goes LIVE Next Sunday!​

Sunday March 19th - 3:30 PT (6:30 ET)​

Next Sunday at 3:30 PT we will begin our Deep Dive into trading Butterflies. This class will consist of well over 5 hours of In Depth Content surrounding the trading of Butterflies. Some of the many topics we will cover over the 5 weeks: My solid track record with Butterflies? The detailed anatomy of Butterflies and HOW they make their money? Best Entry/Exit considerations (TIP - this trade gets a lot juicier in volatile markets) What are the best symbols to trade and why? How does volatility impact Butterflies? Why is the Butterfly one of the BEST Reward to Risk trades in crazy markets Exploration of MANY of the common upside and downside adjustment methods How should you size your trades/what % of your account should you use? A look at many of the trading tools and resources that I use in my day to day trading As a LIVE course participant, you will be able to ask questions as we go through the content in detail!​

Watch Brief Video - AND Sign up NOW!​

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