The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we are going to be talking about how to setup an iron butterfly, so walking through some of the basic mechanics around how you can setup an iron butterfly strategy. Before I even talk about just a very simple example, as always, when we’re setting up iron butterflies, we are mainly using our trade optimization and back-testing software to determine how far out to buy the wings of these iron butterflies based on whatever market situation or IV environment we find ourselves in. Oftentimes, if we are trading say 30 days out versus 60 days out and implied volatility is 50 IV rank versus 70 IV rank, that may have an impact on how wide and how we setup our iron butterflies. It’s always I guess advised to go back through and make sure that you’re using the trade optimizer for what it was built for, the purpose it was built for and that is to optimize positions for market scenarios. As far as a general setup goes, obvio