Butterfly Spread - Will You Marry Me?

The butterfly spread is one of the most powerful and reliable option trading strategies around.

There really is not much you have to do in order to realize a profit when trading this strategy in calmer more docile months. They are what I like to refer to as a 'lazy' trade - one that quite quickly kicks off a profit - as long as the underlying - and the stock market in general - behaves itself and stays contained nicely in a range.

But, I guess the same thing could be said for our other bread and butter monthly income strategies as well - like the iron condor, the diagonal, the calendar and the double calendar. At least during those beautifully lazy, calm, quiet trading months.

But what is different about the butterfly spread - what makes this trade stand out from those others - is how it handles during the difficult months.

Ever since the crash in late 2008, theta positive, monthly income option trading has been a challenging endeavor to say the least. Sure, all those afore mentioned trading strategies can and have worked - however through many of the months there's been a lot more work, adjustments, annoyance, and stress involved then in past more peaceful trading times.

However - the butterfly spread - has, and continues to work incredibly well - even with volatility levels going off the map. I've traded calendars, and condors, and diagonals - and a lot of other option strategies through this more wild time in the market - and I have to say the strategy that stands out head and shoulder above the others is the butterfly spread. It's the most robust - the most consistent - the easiest to manage - it absorbs big moves the best. It's the trade the has given me the least amount of problems - and the most amount of profits.

Now don't get me wrong - I'm not throwing those other option strategies under the bus...

I just prefer - in a big way - the butterfly spread.

Oh mamma.

Here - I get all teary eyed and emotional just thinking about it.

Hold on one moment please. Allow me to get my composure here...

Basically it comes down to this -

If a low down dirty thug walked into my trading room one day and forced me at gunpoint to pick just ONE trading strategy I was allowed to trade for the rest of my life - I'd have to choose the butterfly spread.

I love you Butterfly Spread.

Oh man...where's a tissue...

by: Ted Nino.

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