Monday, February 8, 2010

02/08 NDX Fast Butterfly

This is the first test on a strategy that I’ve laid out over the weekend. My goal is to enter a NDX butterfly every Monday and trade for at least 8% ROI by Friday, setting the stop at those levels as well. It was inspired on the OEX Weekly Iron Butterfly and the ability to post weekly returns to the account. I’ve set up an automatic stop order to buy back the position if it gets down by 8%.


Anonymous said...


It would be interesting to see a TOS Analyze plot set to 5 days instead of +1 expiration to see where the trade is expected to be in 1 week when you plan to get out.


Anonymous said...

Hi Gustavo,

Great idea - what are your setup criteria for the trade. As there aren't weeklys on the NDX I take it you just use the next expiring month? What about setup - shorts ATM & longs 100 points out?

Gustavo's Trades said...

Hey folks, thanks for the comments. This is an experimental idea, but there is a great potential here, so it is an idea I am pursuing with passion!

The TOS chart is a good thing to have, but I find that these can be deceiving, as the P/L really is a moving target, keep in mind that volatility assumptions are baked in and they are never a constant..

I've been studying entering the trade Monday, about 100 points out, and selling the first short OTM strike on the PUT side. Get out with a stop at -8%, and take profits whenever you reach 8% or more. Re-load next week.

I'll take some time to publish a bit more details on it, but first I need to figure out how to stop the trade properly, as you'll see I got stopped out Yesterday and the trade was not at a critical level... Again, P/L oscilations