Butterfly Spread Trading
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<< Butterfly Call Spread Butterfly Spread Payoff Diagram >>Having traded a wide variety of different option strategies - if not all of them (at least the ones that I’m aware of) - I’ve found butterfly spread trading to be the most consistent, the most enjoyable, the most manageable, and the most profitable of them all.
The thing with butterflies is that when they are sold at the money - you are bringing in a large amount of premium which becomes your ‘premium bank’ for which will give you your final profit - AND - be there for you to draw from to fund your adjustments through out the duration of the trade.
A trade like the Iron Condor - at least the ‘wider’ condors - will have so little premium built into the position that a trader is really limited in the number of adjustments that can be made without depleting the condors ‘premium bank’.
On the other hand - the butterfly - because you are selling the at the money options that hold the MOST amount of premium possible - you’re ‘premium bank’ for funding adjustments is almost always more than adequate - with plenty left over to become your profit from the trade.
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