Butterflies

short call butterflies

Introduction

An option butterfly strategy can be used to bet on underlying volatility.

Butterfly Option Strategy โ€“ Introduction

Underlying NIFTY returns

Traders have to make sure that the underlying returns are volatile enough to generate a profit selling butterflies.

Selling NIFTY Butterflies

A simple back-test

Sell the closest expiry butterfly at each expiry.

A Simple NIFTY Short Call Butterfly Back-Test

Does the same thing work for the BANKNIFTY?

A BANKNIFTY back-test.

BANKNIFTY Butterflies

Avoiding huge losses

A 10-point stop-loss that kicks in 10-days before expiry.

Selling NIFTY Butterflies with Stop Loss

Avoding the baking-in phase

Entering the trade 10-days after previous expiry to reduce uncertainty.

Short Butterflies with a Delayed Fuse

Single-stock option short-call butterflies

Using momentum to drive a short-call butterfly strategy holds promise.

Using Momentum to Short Butterflies