Hi folks. I’m new to the bistro, but I’ve been tinkering with options trading for awhile, and I finally decided to start posting some of my trades in case anyone is interested.

This one is a bearish put butterfly that makes money if SPY pulls back. It also would have been profitable if SPY had gone nowhere after I put it on, but the market has been slowly climbing and now it’s nearing its upper expiration breakeven strike. If I were putting this on today I would use higher strikes, so that the trade would be reasonably profitable even if SPY expired right where it is now.

Currently, the position is showing a loss of $89. If SPY continues on up to the point where my loss reaches $250, I will add another butterfly at higher strikes to widen the tent. I will also try to avoid dealing with expiration week gamma by planning to close the week before if I can get any kind of decent profit.

Edit: Thanks to Hawk’s questions, I changed the plan for adjusting if SPY continues up. See the comments below.

Here’s the position:

#Bearish Butterfly

SPY Jan 15th (Monthly)
334 / 357 / 380 Put Butterfly BTO for 7.20
Max Profit $1580, Target Profit $500
Max Loss $720, “Take Action” Loss $250

I’ll update as I manage or close the position. If any of you are experienced butterfly traders I would appreciate any advice! Thanks!

Jan 2021 Put Butterfly