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8/15/19: Portfolio Analysis - Butterflies Are Hard!

From Theory To Practice

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

In today’s portfolio analysis, we have an outstanding example of why it’s so difficult to achieve high levels of profitability with a standard Butterfly. Here, we have our CMG position that is nearly at the perfect price, with only 1 DTE, and it is still only showing a modest profit. To combat this, we normally manage our Butterflies very aggressively, at around 20% of max profit, but this is still very important to recognize for something such as a Free Butterfly.

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