Iron Butterfly Weekly

Choose butterfly if you expect the stock to stay very close to one price (pin). Choose condor if you just want it to stay within a range. Butterfly has higher credit but much narrower success zone.

Credit is typically high (often 60-80% of wing width). For a S$1 wing width, you might collect S$0.60-0.80. But you only keep this if stock expires exactly at your strike; any movement reduces profit.

Gamma measures how fast delta changes with stock movement. Weekly butterflies have extreme gamma because ATM options near expiration are most sensitive. Small moves cause big P&L swings. This is why reduced position size is essential.

Generally no. Exit by Thursday morning to avoid expiration complications (pin risk, assignment, after-hours moves). Taking 50-75% profit early is usually wiser than holding for maximum.

Your profit decreases and potentially becomes a loss. If stock moves beyond your breakevens (strike ± credit), you're in losing territory. Beyond the wings, you're at maximum loss.

Ideally choose the strike closest to current price with high open interest (for potential pinning). Round numbers (S$33.00 vs S$33.25) often have more OI. Technical levels can also work if stock is near support/resistance.

Standard is S$1.00. Use narrower (S$0.50) if very confident in pin. Use wider (S$1.50-2.00) if want more room but lower credit. Match width to your confidence and expected stock movement.

Options are limited due to time. You can: (1) Close entirely, (2) Roll to new ATM strike if confident, (3) Convert to IC by moving one short strike. Often closing is best - not enough time for adjustments to work.

Reduce position size (50-75% of monthly). Take profits quickly (50% target). Set tight stop losses. Monitor actively during the day. Don't set-and-forget. Consider gamma scalping if experienced.

After the first 30-60 minutes when spreads tighten and opening volatility settles. Midday often has best liquidity. Avoid last hour when spreads may widen.

Check open interest at each strike - higher OI = more hedging = stronger pin. Look for strikes with unusually high call and put OI combined. Round numbers typically have more OI. Track historical pinning patterns for the underlying.

As gamma pushes delta around, trade stock opposite. Delta goes to -20 → buy 20 shares. Stock reverts → delta near zero → sell shares at profit. Requires active monitoring, quick execution, and understanding of stamp duty impact on profits.

When you have a slight directional bias but still want theta. Broken wing gives more room on one side. Example: bullish broken wing has wider put wings - if stock rises, you still profit; if it falls moderately, the wider wing gives protection.

Use weekly butterflies for additional theta boost during expiration week, limited to 1-2% portfolio. They can offset gamma from long positions. Don't let weekly butterflies dominate - they're high risk supplements.

Higher IV = higher credit (good for entry). But high IV often means expected movement (bad for butterflies needing stock to stay put). Sweet spot is elevated IV with technical support for stock staying at level. IV crush can help post-entry.