I have Fabio, who’s been my coaching and mentoring student over the last little bit.
We’ve worked on iron condors in the past. Now he’s actually working on butterflies. He’s got about a month in on butterflies and I just wanted to give you another perspective from someone who’s kind of just recently done it.
Give you some insight on how difficult to get started with butterflies and just maybe a perspective of how he sets one up.
It’s a starting point for you to see that after a little bit of time, you’ll be able to do this on your own. There’s always a slow learning process but that’s the point of getting into it. Just like riding a bike at first, you’re falling down at the start and then you keep getting better and better.
Enjoy the video with me and Fabio
Sasha: Today we’re going to take a look at and cover a couple of things on the butterflies and I just wanted you to see how difficult it is to learn. Here, I have Fabio uh who I worked with 101 for coaching and mentoring over the last few months so far. He’s just been doing butterflies recently over the last month or so and I wanted you to get a different person’s perspective on how difficult it is to learn butterflies. So can you give some of the people out there a little insight on how the process was to learn butterflies? Was it extremely difficult? Was it kind of easy-medium level? What are the struggles you kind of had with it?
Fabio: Actually it was easy mainly because I was learning article before and that gave me an idea, the foundation, about the options but butterfly was an easy concept/strategy to understand.
Sasha: Why did it make it easy for the transition from the iron condors to the butterflies? How are they kind of related and how did it make it fit for you?
Fabio: Because the iron condor gave me the foundation about the strategy in options, about delta, probability of touching and the things I start to use by using butterfly strategies.
Sasha: I’ve shared with you, because with the mentoring people, I always give them the courses even ahead of time as I’m filming them and doing modules and modules. I think that could help. So you’ve got some insight to the course even before it was released and some of the videos. What would you say as far as those course materials? How helpful were they for learning the butterfly spread rather than you know scavenging some things on YouTube? Because I know you did some things on YouTube there as well.
How was that beneficial relative to the other videos?
Fabio: So the course video gave me a nice specific idea about how to build a butterfly. So I didn’t know exactly how to do just watching YouTube videos sometimes . But the course video gave me specifically how I built the butterfly strategies. About how I need to fall about delta and how I choose my strike prices. That all together gave me a specific idea about how to to build a butterfly strategy.
Sasha: All right, so can you give people some insight on the way that you build out your butterfly? If you don’t mind can you go ahead and show people on screen like the way that you do it now and how easy it is for you to kind of do it. I know at the beginning.
you probably struggled a little bit but now it’s a little bit easier for you to do it.
Fabio: Should I do one with neutral or directional?
Sasha: Whichever one you kind of like to do. Just show one and how you do it and what are the types of trades you’ve kind of been doing. So that way we can just get an insight because you’ve only been doing this about a month, right? That first few days was it a little bit it was a little bit of a struggle, right? It probably took you 30 minutes to put on one butterfly or maybe an hour.
Fabio: I don’t know, about 30-45 minutes to 1 hour and as you practice and having a foundation about the course, you just start to do faster afterwards.
Sasha: So now, how long does it? Well let’s see how long it takes you to put on a basic butterfly. We’ll just do it on a paper platform and you can just open that one up.
Fabio: Let me share the video here. I entered the ticket here, this symbol.
Fabio: Then if I want to do at around 36 days or 29 days, it’s considered pretty much a short term. 36 days is better. I come here and I see at the money that would be between these two points.
Fabio: I change the color. So add the money. I choose this one and I click with the right bottom of the mouse buy and butterfly.
Fabio: After that I need to check around 20 to 30 delta. I would say 20 delta is 250.
So come back here 250. Sasha, I think I will change this 250. I think I’ll change this strategy.
Sasha: What’s wrong with 250?
Fabio: Nothing. I just need to putting here.
Sasha: Exactly you got it.
Fabio: All right so 250, 230. Then I need to do the same thing here. So I come here and give 210. So I have 210, 230 and 250 are even and equal.
Fabio: After that I analyze my trade. So that gives me an idea about a neutral butterfly. I don’t have directions here.
Fabio: I will make my money mainly considering theta and that it is. So that’s my butterfly-no directional.
Sasha: Easy setup, not too bad. Can you show that Microsoft butterfly. What do you have there? So that took a couple minutes at the beginning. Obviously you’re trying to figure out and learn which one do I click this and that. So this one doesn’t take too long but go ahead why don’t you take a look at that other Microsoft one that you already have going because that one’s been up for a little bit.
Fabio: It’s not a butterfly.
Sasha: Okay so it’s an iron condor one. Not a problem. So the butterfly trade you know it doesn’t take too long to go ahead and set up and construct. After about a month you kind of get the hang of it and so on. Are there any kind of tips that you would recommend for other people before they do these butterflies or recommendations of things to learn or watch out for as they’re learning it because you’re just you just did this. You’re just basically still actually going through it and learning more and more of the butterfly trades. So any kind of last minute tips or words about butterflies?
Fabio: As I saw over the course gives you the power of direction. So I like to use sometimes you know if i see this talk is going to explode or a few times we could save for earnings once in a while, I could use butterfly to give me some extra profits if I’m considering that a stock is going to rise or drop. So what I like about butterfly is that also I can use for no directional as one that I did. I can give some if this talk is going to explode and that I have a good feeling about that I can build another type of butterfly. I would say a different strategy just changing the deltas and build a directional butterfly.
Sasha: Absolutely. The butterfly is very cost effective for direction and quick theta if especially because you got you’re selling right at the money if you’re doing kind of a database trade. So cool. Well thanks for sharing and thanks for your time. I just wanted people to just kind of see you know somebody else a month into it of the butterflies just to how you could construct one and that you know you can get a little more familiar with it after a little bit of time. I appreciate your your time.
Fabio: Yeah, anytime I’m here.
All right so there you go. I hope you got some insight there and you can see you know just the process of putting on a butterfly trade.
Once you’re a month into it, it’s not that difficult.
You do have to check a few things and as he mentioned there are some struggles at the beginning but after you do it, you know 5-10 times, you’ll get the hang of it.
You’ll start putting more and more of these on a little bit easier.
You might say you want to do a balanced one or an unbalanced one and that’s going to be just a personal perspective.
I will see you next time.