The Bearish Butterfly trading strategy takes the advantages of directional trading and combines them with the advantages of high probability income trading to create a high probability, high yield, positive Theta trading system.
Some things I love most about the strategy are that there is no searching for stocks, no need to pick direction, no need to perfectly time the market and no need to sit in front of the computer all day. The Bearish Butterfly works exceptionally well in high volatility markets, down trending markets and sideways markets. It can also work well in moderately up trending markets as the trade can withstand a substantial move against the position. It can even do well in extreme up trending markets if the trade is timed to the market cycle.
Does this mean the trade always wins? Of course not, no trading system wins all the time. But it does give the position a higher probability of winning than wide iron condors while maintaining a much better risk reward profile.
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See examples of this options trading strategy in The Winning Trade episodes:
Returns of this trade: This trade earned approximately $5,840 or about a 11.7% gain on planned capital!*
Returns of this trade: This trade earned about $7,300 or about 14.5% profit in 35 days.*
Returns of this trade: This trade earned earned approximately 17% gain in 39 days through a down move of over 40% in the RUT followed by a bounce of over 200 points. AMAZING!*
Returns of this trade: This trade earned about $11,592 profit or approximately 23% gain in 38 days.*
Returns of this trade: This trade earned about $10,000 profit with a maximum capital in it of about $16,000 or about 60% of actual capital.*
Returns of this trade: This trade earned about $10,000 profit with a maximum capital in it of about $19,000 or about 50% of actual capital.*
Here are the yearly returns as we have calculated them from the Options Trading for Income by the Guidelines weekly webinar:
|Average Yearly |
* The percentage returns shown above are the result of the real-time, hypothetical trades as tracked in the Options Trading for Income by the Guidelines weekly webinars or the results of backtesting. Trades are real-time simulated trades or have been backtested. Simulated trades and backtested trades are believed to be represented as accurately as possible, however, live results may have been different. This summary is shared as an example for educational purposes ONLY, it does not imply that the information stated is accurate nor that it is possible.
**M9 in place of the Bearish Butterfly