Butterfly Options Trading System
Your membership to DaytradeTeam will include alerts from the Butterfly Options Trading System:
|
* Note that 100% of amount risked could be lost on options
spreads, and that profits are
NOT guaranteed on ANY trade. Please allocate funds responsibly.
What is a Butterfly Options Spread?
Butterfly Spread Defined: An options trading strategy combining a bull and bear spread. It uses three strike prices. The lower two strike prices are used in the bull spread, and the higher strike price in the bear spread. Both puts and calls can be used. A very large profit is made if the stock is at or very near the middle strike price on expiration day.
What it means: When you enter a Butterfly Spread, you are actually entering 3 options orders at once. If the stock remains or moves into a defined range, you profit, and if the stock moves out of the desired range, you lose. The closer the stock is to the middle strike price on expiration day, the larger your profit.
EXAMPLE: Take
a look at what the order looks like on a Butterfly on the
stock EBAY where we buy 1 put option with a strike of 47.50,
sell 2 put options with a strike of 45, and buy 1 put option
with a strike of 42.50. The result is a complete trade that
gives us a 0.55/contract ($55) DEBIT to our account (for each
contract we choose to do).
The price of EBAY at the time of this trade was 43.81.
EXAMPLE: Now
look at the profit and loss scenarios that could occur on
the trade we entered above. As you can see, if the stock
stays near its current price, we'll make money. We want
it to close
as close to 45.00 as possible, as that is where our max profit
point is. We are profitable anywhere from 43.05 - 46.95
and
have a max loss of only $55. This, when compared to the max
gain of nearly $200 per contract, makes this a very attractive
trade.
Move mouse over chart to display profit/loss scenarios at bottom:
Expert Analysis leads to Expert Results
With Butterfly Spreads, we are going for "Home
Run" profits : When we look for Butterfly Spread
trades, we are looki
ng
for options trades that have an extremely high level
of profit compared to amount risked with a reasonable
range of profitable price points (called the sweet spot).
We look for options that have higher levels of implied volatility
than we believe is realistic. The amount risked will always
be substantially lower than the maximum profit on our Butterfly
Options Spreads.
Our Options Trading experts scan the market looking for the best Butterfly Spread trades that meet these criteria:
1. Current Stock Price near Max
Profit Point — We do not want the stock to
have to move big in order to profit big. In fact, most of
our butterfly options spreads will have a max profit
point within 3% of current stock price.
2. Steep Profit Range—Our Butterfly
Options Trades typically have a maximum profit of 2-15 TIMES
the amount of money risked. When the stock price settles in
our predicted range, it is a major boost to your portfolio.
3. VERY LOW max loss-- Butterfly Spreads
sent by DaytradeTeam have an extremely low, well defined risk.
In fact, most of our Butterflies can be traded with
as little as $100 risked per trade! Options Trading
is about controlling risk, because you will never be correct
on 100% of your trades.
Real-Time Alerts for Entry AND Exit
Understanding
not only WHAT to do, but why we are doing it is essential
to your long-term success in options trading. At DaytradeTeam
we believe strongly in the value of education and improving
the trading ability of our members.
You will always know exactly where we stand on every trade, every day. We will send you real-time entry AND exit trade alerts via email and our Live Trading Room (Click here for demo) along with our online trade forum to keep you fully up to date on every position. Each alert and update comes complete with an expectations and analysis movie (view demo) that includes entry price limits, stop loss levels and profit targets to insure that you always know exactly what is going on with every open position in your account!
Options Trading that works with YOUR Schedule
Every options trade alert that we send is sent with the busy professional in mind. In fact, once you receive a trade alert from us, you can be confident that the trade can be made anytime within the next 24 hours. In other words, you will NOT need to be at your computer all day in order to enjoy the full benefits of our Options Trading System!
System Summary
Butterfly Spreads are a defined-risk, extremely high-reward strategy that go for huge max profits on every trade. The Butterfly Trading System is a part of the DaytradeTeam Options Trading System.
Your membership with DaytradeTeam will also include all of our Day Trading Systems and Swing Trading Systems, along with each of our other Options Trading Systems.
Syndicate Site
