Option trade butterfly
This article originally appeared on Butterfly Options Insider Web site. In the second part of my series on butterfly spreads if you missed Part I, you can check it out hereI will visually show how to place a call butterfly spread using the TradeStation platform. The actual trade is meant to be an example, NOT a option. Below is a daily chart of the underlying on which a butterfly call spread will option placed. The next figure shows the step of switching from one option strategy to another. This is the very first click we ought to do prior to proceeding to the next click. The next step involves going to the View Tab and requesting the display of an additional component of the Butterfly Analysis window. Observe in the figure below that trade default only Asset Pane and Options Pane are checked off. In order for us to be able to trade spreads, we need to also check the Spread Pane, as shown below. The Asset Pane reads from left to right with the following data: First item being the ticker, which is whited out since this example is for educational purposes only. The second is the last price of the underlying, the net change in points, the high colored in light green trade the trade the underlying has traded the day I had placed option trade. The next trade is the change in percentage, which on that butterfly was only 0. The additional info on the Asset Pane relates to the volatility. The second component option the TradeStation Option Analysis Window is the actual Option Pane. It displays the following data, which are completely customizable: Symbol of individual options, Option, Open Interest, High, Gamma, Low, Bid, Delta in light blue, Ask and Strike butterfly. All this information pertains to the calls, and then it repeats on trade right side for the puts. However, in this example, I am addressing a trade butterfly, butterfly I will solely focus on the call side of the option chain. Additional info on the Option Pane that needs to be addressed is the dark blue line with a small square box containing a plus sign in it. When we trade on the plus, it becomes a minus sign displaying the various strike prices. I have selected only five strike prices, those between 40 and 45, and have blocked all others. The third part of the TradeStation Butterfly Analysis Window is the Spread Pane, which is currently displaying only two months of data: January options which were expiring two days after I originally wrote this and February. There were other months available, yet I have selected less info. As I mentioned in my previous article on this topicthe wings are bought 41 and 45 calls while the body or gut 43 option is sold. Observe that the platform ensures that there is not a mistake as to which strike prices are involved. However, be aware that this butterfly spread has a two-point wing span. This line matches the strike prices that are involved in the spread with the Greeks. Self-evidently, the light blue box displays the aggregate of our butterfly call spread. Stay tuned for the final article of my option on butterfly spreads. Article printed from InvestorPlace Media, http: Financial Market Data powered by FinancialContent Services, Inc. Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes. Breaking news sponsored by googletag. Butterfly Spreads butterfly How to Trade a Call Butterfly Spread Feb 3,6: More on InvestorPlace 5 Battered Stocks Investors Can Buy for Big Rebound Returns 3 Dow Jones Components Hitting the Pavement 3 Stocks to Play the Summer Travel Bump 7 Healthcare Stocks That Will Give You Chest Pains 3 Grocery Stocks to Sell Before Amazon Slaughters Them Is Trade the Next Target for Amazon? Rowe Price Funds to Buy Today. Is Costco Wholesale Corporation COST the Butterfly Target for Amazon? View and vote in our How option are you about the U. Choose A Page About Us Press Center Resources Advisory Services Free Newsletters Free Reports Contact Us Advertise With Us Employment Privacy Terms and Conditions Disclosures and Disclaimers Media Sites Sitemap jQuery " footer-links".
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