<p>[url=<a href=“http://www.sec.gov/answers/churning.htm]Churning[/url”>Churning | Investor.gov]Churning[/url</a>]</p>
<p>Churning is illegal. You don’t have to pursue anything. It is a pain…</p>
<p>Yeah doct, nice publicity for the cboe. :)</p>
<p>I sold my 415-420 call spread in aapl for a loss…</p>
<p>Sold the 470 puts in aapl that expire next week.</p>
<p>Cuban…come on…the exchanges were always about transactions…</p>
<p>LOL. I turned the sound down when Cuban came on. I love the guy. He’s a genius, but I remember him investing in FB when it was 33 as a long term investment. He’s very talented but he has an opinion just like everyone else.</p>
<p>BCEagle91 may be kicking the markets butt, but I lost a lot in that fake AP tweet.</p>
<p>OK - I took the butterfly plunge. I bought the 10/19/13 aapl 410 - 510 -610 butterfly for 21</p>
<p>Cool…Doct.</p>
<p>Razorsharp…did you have stop orders that were hit?</p>
<p>I was up huge in several stocks and also in the S&P futures. When I saw the S&P start tanking I sold at any price and when that happens you get the price you get. Given the leverage in S&P futures a small numbers loss is a big dollar loss and that’s what happened. Everything went back up within five minutes meanwhile all my day trades that were at big profit were now at big losses. Not fun.</p>
<p>I don’t use stops because in futures because brokers will run your stops for the fun of it.</p>
<p>Razorsharp, I see…yeah that sucks.</p>
<p>“I don’t use stops because in futures because brokers will run your stops for the fun of it.”</p>
<p>I know hft firms will run stops… :(.</p>
<p>Doct, I want to do a long term butterfly now…
Usually…I don’t like to go out that far…but I am thinking about it…</p>
<p>I figure almost 6 months is long enough. For aapl, it comes close to 2 earnings annoucements and I think if this stock is going to do anything, it should be by October.</p>
<p>Yeah…but the oct expiration is before earnings…</p>
<p>I don’t know if that is good or bad… Lol</p>
<p>Of course I could do oct and jan…</p>
<p>And I don’t know how positive I am in aapl…I think it is going to be higher…but how much…</p>
<p>I haven’t been watching aapl’s options that much…</p>
<p>I don’t know if aapl is going to close 410, 420, 400 tomorrow. :)</p>
<p>Makes a slight difference on the pricing of the spreads… </p>
<p>I don’t know…I have to leave in an hour so I don’t think I will do anything today…</p>
<p>I may buy more and go out to January, if the price comes down a bit. I only did 2 - 4 - 2 contracts so I’m not that worried</p>
<p>Yeah…that is good.</p>
<p>There is nothing wrong with your butterfly at all.</p>
<p>I sell more puts than you…</p>
<p>I don’t want these butterflies to affect that…and they might.</p>
<p>I only want to be long a certain amount of deltas…and the butterly has deltas.</p>
<p>When I trade I put everything together in a symbol. That is why when
you read my posts You see I net everything out…</p>
<p>And I get a delta…and I have time decay…</p>
<p>Just an example… Let’s day the most deltas I want to take on in aapl is 1000 deltas…equivalent to 1,000 shares long…</p>
<p>And I am short 10 390 puts that expire in two days with aapl at 400…</p>
<p>If aapl drops to 380 on Friday…in reality I am going to be long 1,000 deltas…atleast on the downside. </p>
<p>If I also do the spread…I am going to exceed what I want my deltas to
be…</p>
<p>This is an example and a simplification that gets to the heart of the matter for me…</p>
<p>Am I willing to be longer than 1,000 deltas If the stock breaks? Will the butterfly affect my put sales? Do I care? How much sugar do I want to eat? You get the idea…</p>
<p>I am making things more complicated than they have to be because for me…they are…each trade can affect other trades…</p>
<p>If you are not interested in what I wrote, that is fine. It is a little much. I like it though. :)</p>
<p>If there is one thing that drives me nuts about futures options it is how they are named. In what month does the June 2013 option on the June WTI contract expire? Common sense tells you it would expire in June. It actually expires May 21, 2013.</p>
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<p>I was in the fitness center on an 11-mile run.</p>
<p>One thing about these butterflies though. Their potential maximum profits are usually illusionary. You are not going to take off the trade at expiration and make a 79 dollar profit on your trade.</p>
<p>The trade does not have a 4 to 1 profit to loss ratio. </p>
<p>Because as the trade gets close to expiration…the risk reward shifts and you will take it off early. If the butterfly trades for 80 bucks on Oct 1, you are going to adjust, right? Maybe sell it?</p>
<p>So the profit potential is never quite as good as it looks.</p>
<p>If you were long the 420-460 spread and the stock ran to 560 you can
get close to maxing out on that trade depending on how close you are to expiration…</p>
<p>Butterflies are more dangerous than a call spread in some ways…
The value of a butterfly can shift…</p>
<p>You have the aapl 405-410-415 butterfly in and the stock is at 410 with 5 minutes to go before expiration…and then the stock closes 405. Your 5 dollar value is now zero at the close. Oops.</p>
<p>Just a heads up…</p>
<p>“If there is one thing that drives me nuts about futures options it is how they are named. In what month does the June 2013 option on the June WTI contract expire? Common sense tells you it would expire in June. It actually expires May 21, 2013.”</p>
<p>That bugs me too.</p>
<p>Ok… Because of what I wrote about butterfly spreads maximum profit potential…post 6954…
I think I would compare the 410-510-610 butterfly to the oct 410-415 call spread…or the 410-420 call spread…or 410-425 call spread…or the 410-445 call spread… Etc</p>
<p>I looked at this before and whether the risk - reward for the butterfly is 79/21 or something slightly less (also need to factor in the probability of aapl getting above 589 etc), the ratio is higher than for any of those spreads.</p>
<p>Well… I look at it a little differently…</p>
<p>I look at the butterfly risk reward ratio as closer to 3 to 1…</p>
<p>So if I can buy a call spread with a similar ratio and lower break even points I would look at that spread…</p>
<p>I may even take a smaller risk reward ratio on the call spread if my break even is lower…</p>
<p>I guess you can adjust by selling the 410 calls and buy calls with higher strike prices if aapl runs up. </p>
<p>I don’t know. I am in a car.</p>
<p>If you can’t find anything you like better with a 3 to 1 or 4 to 1 risk reward ratio then your butterfly is the trade for you. </p>
<p>Like I said before, there is nothing wrong with that butterfly trade.</p>
<p>It is a good trade…</p>
<p>Just looking that the AAPL chart. If you draw a line between the high on Mar 25 to the high two trading sessions before Apr 15, you’ll see that today’s high touched that line so the line is resistance. The green volume today is lower than it has been for the previous six sessions so this is giving traders pause. If it closes above that trendline, then it’s a swing long - same trade that I made a while ago - downtrend resistance line break. If it doesn’t break through, then the bottom of the channel is probably in the $360s.</p>