Welcome to this new blog about Butterfly Option Trading. This site will mainly focus on Apple since it is one of the most heavily traded stocks and options in the market. All the tools that are presented here could also apply to any other optionable stock. The trading strategies shown are mainly for intermediate/expert option traders with significant trading experience. If you are new to option trading, this site might be a little advanced for your experience yet I might later expand the site to show some of the basic typical strategies that could be done without getting into complex strategies.
A Little History About Me
For all you readers, my name is Alan. I am a CFA charterholder. I have traded options for a couple of years and have gone thru the journey of trading stocks, ETFs (even leveraged), and options. I have tested many different strategies and over the years there is only a handful of proven strategies that actually work assuming insane DISCIPLINE. What I mean by discipline is doing the same thing with the same level of risk every time you do. You do not diverge from your discipline approach. It is easy to bet today $100 bucks and tomorrow $200 when the strategy suggests bet the same amount every single time you do it. The simple framework of buying simple calls/puts is way too risky simple because of 2 reasons 1) One needs to get the DIRECTION correct and 2) Time is an ENEMY. Of course, one could trade options with hard stops, but this assumes you either have Advanced Orders in place to trigger the stops or you are full time trader (who knows what it is doing).
My learning started in stocktwits.com. The books that I have read come from one of the best Option Authors in the industry: Jeff Augen.
The 3 books from Jeff that I have read ( I truly recommend you reading them if you haven't if you have some option basics knowledge and math) are:
1) The Volatility Edge in Option Trading
2) Trading Options at Expiration: Strategies and Models for Winning the Endgame
3) Day Trading Options: Profiting from Price Distortions in Very Brief Time Frames
Here is my intended outline for the next upcoming blogs:
1) Intro to Butterflies
2) Max Pain Theory and Min-Max Mean Value Theory
3) Option Pinning
4) Historical / Calendar Effects
5) Weekly Overview of Apple Butterflies
6) Monthly/Quarterly Opex Strategies
You can follow me on Twitter or Stocktwits.com below: