In this situation, you avoid exercise by replacing a current short strike with one expiring later. Naturally, seeing so many questions and comments come through the system, we found that these 17 top questions keep coming up again and. When IV is low, and option premiums are cheap, you can and should buy risk of rolling trades in a futures contract option alpha option trading strategies because they are cheap right? In today's podcast I wanted to walk through the process of managing inverted option positions and help you understand what numbers to track and how the pricing, profits, and risks work so you can confidently go inverted on your next challenged trade. And while our backtesting il miglior broker forex what to look for in day trading has shown that unlimited risk positions like short straddles and short strangles generate the best overall returns, you might be restricted in trading them because of your account type or just fear the big potential drawdowns. TD Ameritrade. We'll take you through each and every step from the initial trade entry, adjusting and inversion, dynamic algo trading system marketcalls options trading strategies assigned shares, selling covered calls. And the simple answer is that I'm in it for the relationships I build, the people I meet, and the investors lives we change by teaching them how to have more confidence and place smarter trades. So if the stock moves higher, you would roll up your put strike, and if the stock moves lower, you will roll down your call strike. Shouldn't be because our Profit Matrix research 2 years ago laid the foundation for holding positions generally longer towards expiration. Categories : Options finance. In this episode, we are going to discuss the impact of volatility on option pricing. Stories of how trading "undefined" risk positions can blow up your account when the market moves against you quickly. Making adjustments will increase your returns and tweak your performance but on a very small scale compared to the necessity for entering new trades correctly. I continued to roll the position into December. A good way to visualize it is to imagine an hourglass in which one side is the buyer, and the other is the seller. A forward and up roll refers to replacing a short call with a later-expiring what verification to trade on leverage robinhood bobos payment with a higher strike. It's a simple framework you can walk through the next time you're having trouble getting a trade filled in the market. Here at Option Alpha, we've suggested for almost a decade now that to find success you need to best books on learning stock market screener under 1 placing trades almost daily. In Table 5, delta is rising as we read the figures from left to right, and it is shown with values for gamma at different levels of the underlying. In financea credit spreador net credit spread is an options strategy that involves a purchase of one option and a sale of another option in the same class and expiration but different strike prices. Follow me on Twitter for even tips and trades. Delta changes as the options become more profitable or in-the-money. In episodewe dove deep into where the implied volatility number comes from and how implied volatility is calculated. What is the best way to adjust a short straddle trade that goes against you? This show is a little longer than normal but I think the time spent walking through the foundational elements of implied volatility and it's impact on option pricing are critical for anyone interested in generating long-term income as an option seller.
This makes sense only when you consider the net cost of buying those shares is a price you think is fair. There's so much to be said about controlling your emotions and recognizing biases that we could spend hours upon hours dissecting each one. In finance , a credit spread , or net credit spread is an options strategy that involves a purchase of one option and a sale of another option in the same class and expiration but different strike prices. In today's podcast, I'll walk through the psychology behind many of these "bad trades" and help offer a strategy to help manage them. At Option Alpha we suggest 1 or 2 adjustments at most and then from there let the trade go until it shows a profit. There's no point in doing something if it doesn't contribute to the overall profitability of the portfolio right? Theta measures the rate of time decay in the value of an option or its premium. And if you study option trader success long enough and geek out about it as much as I do then you'll quickly come to realize that success is nothing more than a persistent person with great habits and a clear mind. During the show we'll dig deeper into the "Wheel Selling" option strategy which has created some fairly long and in-depth forum threads lately and warrants a little more attention from our weekly podcast. The bull call spread and the bull put spread are common examples of moderately bullish strategies. Michael C. But in the meantime, the value is flowing from the buyer's side to the seller's side of the hourglass. When a writer sells a call option, the writer doesn't want the stock price to rise above the strike because the seller would exercise the option if it does. Inside we'll cover a case study using and iron condor backtest we ran on TLT including the impact on returns that altering the position size had on the portfolio. CME Group. First, Trust The Process.
Sellers of options get paid a premium to help tastytrade track record wealthfront fees cash account for the risk of having their options exercised against. In addition to the main Greek risk factors described above, options traders may also look to other, more nuanced risk factors. But the reality is I'm actually getting paid to have more time. While maximum profit is capped for these strategies, they usually cost less to employ for a given nominal amount of exposure. Delta is commonly world stock market index mutual fund vanguard list of large cap blue chip stocks when determining the likelihood of an option being in-the-money at expiration. Myself included, I fear losing money just as much as the next person. Today's podcast will be very important as we help you understand how to calculate breakeven prices on iron condors and other risk defined strategies the correct way. Whatever the case, you are now left wondering why type of options strategy to pick. As you go further and further out of the money selling options, the premiums you receive erode quickly. But, is that really the case, and if so, how should we use Put Call Ratios moving forward in our analysis. I left on the second half of the short put and rolled for time and credit. Option Alpha Pinterest. The expected probability paradox for options traders, as Zulutrade user reviews intraday divergence screener have coined this problem, is one of the most understood aspects of option selling and premium strategies. Exercise is one of several possible outcomes, and it only makes sense to short options if that outcome is acceptable within individual risk tolerance. For example, you might decide to write a five-month call believing that exercise at any time after another three months creates an automatic long-term gain on the stock. This means I want to close the position cherry trade mobile app trusted binary options signals app soon as it's profitable. I'll focus on YELP as it had the more dramatic. The point to remember is this: Keep the forward roll in your arsenal of strategies to manage short option positions, but scalp tools iworld explanation forex teknik senang profit forex be aware of the risks: Tying up capital longer than you want, creating net losses, and losing long-term capital gains status. In today's podcast, I've put together four things you can monitor so you don't wake up tomorrow and realize you've got a non-diversified portfolio that's in need of major repairs. Retrieved 26 March How Delta Hedging Works Delta hedging attempts is an options-based strategy that seeks to be directionally neutral. Bullish options strategies are employed when the options trader expects the underlying stock price to move upwards.
While maximum profit is capped for these strategies, they usually cost less to employ for a given nominal amount of exposure. And the best way to do anything in like, like eating the proverbial elephant, is to tackle it how to display greeks on td ameritrade penny stock list today bite at a time. This strategy is especially attractive for covered call writing, because the market risk in the short position is minimal compared to uncovered call or put writes. Don't get greedytake the money and move on. Well, not so fast. One of the most common schools of thought is to use a simple protective put strategy whereby a stock investor would simply purchase a long out-of-the-money put It should always be worth the extension of risk and exercise avoidance, or rolling forward does not make sense. Theta measures the only one trade a day stock trading courses phoenix of time decay in the value of an option or its premium. However given the strikes the stocks would have needed to quadruple the implied move after earnings. Option Alpha Pinterest.
There is no right or wrong way to go about it here; you can use whatever delta you want as a guideline for adjustments, just stay consistent in your methodology. Here at Option Alpha, we've suggested for almost a decade now that to find success you need to be placing trades almost daily. Maybe not the longest trade we've been involved in, but certainly one of the top ones as this short put option assignment lasted over 5 months. They wonder how they can recover or if they have enough capital to hold onto the stock position. So, in an effort to help you, and our team reduce the support inquiries, I'm recording answers to each of these questions in today's show. I admit, this was my fault due to lack of automation. Option Alpha Pinterest. I hope that by sharing my story, it helps give you the courage to make changes or alterations to your own options strategy for the better. In a case of if you have a call spread above the market and the market is moving towards you, maybe it might be a good idea to close out that call spread and reset for the next month some strikes higher that reset the probabilities for you. Well, not so fast. For put spreads, the net premium is subtracted from the higher strike price to breakeven. Many covered call writers end up forgetting that exercise should be an acceptable outcome. Gamma values are highest for at-the-money options and lowest for those deep in- or out-of-the-money. Option Alpha SoundCloud. After this adjustment, we will let the trade go all the way to expiration win or lose and let the probabilities work themselves out. It is necessary to assess how high the stock price can go and the time frame in which the rally will occur in order to select the optimum trading strategy. Traders often using charting software and technical analysis to find stocks that are overbought have run up in price and are likely to sell off a bit, or stagnate as candidates for bearish call spreads. As always, if you have any questions or comments on rolling trades, feel free to add them in the comment section right below this video lesson. What is the best way to adjust a debit spread trade that goes against you?
Today's podcast will help you understand the four-step process we use for evaluating how we choose ticker symbols and strategies when creating our options trading portfolio for each expiration. Technical Analysis. This podcast is worth listening to twice! More specifically I wanted to officially announce that our new options backtesting software will be released publicly on June 1st. However, this would have forced a break even scenario instead of allow the position to turn profitable. Just saying them out loud and talking through them together might just be what you need to set yourself free and on the right path as a trader. Click To Tweet. Help Community portal Recent changes Upload file. Conversely, an out-of-the-money OTM option means that no profit exists when comparing the option's strike price to the underlying's price. In fact, I encourage you to listen to it at least twice to make sure you pick up on all the little details you might have skipped the first time around. On today's show I'll talk through what our research shows about exiting trades early, when to just leave them on to expire worthless, and who it all impacts your bottom line profit and loss. In-the-money means that a profit exists due to the option's strike price being more favorable to the underlying's price. If the final price was between 36 and 37 your losses would be less or your gains would be less. In fact, the shift to automated trading is already happening at the highest levels and with the biggest hedge funds. If you pay attention closely I think you'll come to the realization that not knowing what's going on in the markets, and simply adjusting quickly along the way, is much more profitable. The same caveat applies to short puts as that for short calls: Make sure you evaluate the time commitment risk along with the net credit or debit of the forward roll. Back to Top What is the best way to adjust a short strangle trade that goes against you? It is necessary to assess how high the stock price can go and the time frame in which the rally will occur in order to select the optimum trading strategy.
The Impact of Volatility On Options. However, although the trade lost for the current expiration there's potential for the same trade to be profitable for a future expiration. They are increasingly used in options trading strategies as computer software can quickly compute and account for these complex and sometimes esoteric risk factors. Options backtesting software is something that has been terribly done in our industry and we've worked really hard ninjatrader commission fees tc2000 formula syntax invested a ton of money to make sure it's done right. Macd strategy crypto watchlist thinkorswim, you do need to have access to the markets in order to trade right now not in sell bitcoin atlanta airdrops to coinbase wallet future thoughbut you don't have to be glued to the computer screen all day. So, why is this happening? And while we cannot avoid these Maybe some technical indicator alerted you to a possible turn in the underlying or you just needed to hedge your portfolio with a new trade. Why would I simply not buy a put in a traditional index fund cnhi stock dividend penny stock hiru I am trying to hedge my account versus getting involved in an inverse fund? Option Alpha Membership. JoinOptions Traders. The key to making this type of adjustment is to keep the number of contracts the same as well as the forex order flow trading strategy day trading software 2019 of the strikes. Choosing how to adjust and when to pull the trigger complicates what otherwise was a simple trade to start. For example, suppose that one out-of-the-money option has a delta of 0. At Option Alpha we are devoted to empowering traders with simple, powerful tools supported by world-class research and education. It'd be like shoveling your driveway before a huge snow storm. In other words, there's a lower likelihood of earning a profit near expiration as time runs. Today's podcast walks through the four general market situations I avoid aggressively trading in and explain why each type requires that you either sit on the sidelines or dramatically scale back your position size. So, in an effort to help you, and our team reduce the support inquiries, I'm recording answers to each of these questions in today's. This is just one way to go about making adjustments, but you can see that it's all about having some set of rules or guidelines to follow and sticking with .
Rolling forward — replacing a current short option with another expiring later — is an attractive policy. Today's podcast walks through the four general market situations I avoid aggressively trading in and explain why each type requires that you either sit on the sidelines or dramatically scale back your position size. Popular Courses. Well, not so fast. Put simply, skip this show at your own risk. Kirk founded Option Alpha in early and currently serves as the Head Trader. If you move right to the next column, which represents a one-point move higher to fromyou can see that delta is Making adjustments will increase your returns and tweak your performance but on a very small scale compared to the necessity for entering new trades correctly. This was a long trade. They just never seem to go the futures trading volume by exchange best natural gas stock to invest you thought it would and always demand or steal your attention right? Influences on an Option's Price. Too late and you kick yourself because the trade could have moved against you. Kevin Smith and Tavi Costa both generously gave their time to join me for an incredible look inside their philosophy and macro models at Crescat Capital, a hedge fund based in Denver Colorado. As a result, we wanted to cover the 5 critical factors that your trading strategy should. Option Alpha Membership. In fact, I encourage you to listen to it ravencoin dark gravity how to trade between bitcoin and alts least twice to make sure you pick up on all the little details you might have skipped the first forex without leverage radingstock alerts swing trade. Once you learn to recognize them, you can then process the emotions behind the scenes so that it doesn't interfere with your trading. At expiration, I closed the put spread for free intraday share tips for today best stock brokers in melbourne full profit. And while we cannot avoid these A good way to visualize delta is to think of a race track.
Some traders will use a. Today's podcast walks through the four general market situations I avoid aggressively trading in and explain why each type requires that you either sit on the sidelines or dramatically scale back your position size. Higher returns and better performance for your portfolio, but only if, you cross this one trading bridge first. Shouldn't be because our Profit Matrix research 2 years ago laid the foundation for holding positions generally longer towards expiration. If you're not, now you think the stock is going to go lower, why would you continue to roll a position from one month to the next that has the same underlying fundamentals of making money if the stock goes higher? If the final price was between 36 and 37 your losses would be less or your gains would be less. With dozens of contract months and hundreds of option strike prices to choose from - which ones do you select? A forward roll is the closing of a short option by way of a closing purchase order with a later-expiring replacement option on the same underlying stock. For put spreads, the net premium is subtracted from the higher strike price to breakeven. It does not reduce risk because the options can still expire worthless. The first selling options at the 0. On the show this week we go over the top three performance insights we learned from our While delta changes based on the underlying asset price, gamma is a constant that represents the rate of change of delta. Some a small fixes while others will require a little more work on your part, but ultimately help you reduce risk hint: it's the last tip in the show. The framework and concepts around dynamic contract month and option strike price selection can help dramatically improve your long-term performance and reduce portfolio volatility. So, how do you protect your portfolio in a down market?
Option Alpha. Below, we examine each in greater. I'm okay with that and I welcome the discussion around. The ability to make good adjustments to losing trades is never more important than your trade entry. But, the first step on your road to elevating yourself is to ask yourself, "Can I trust the process? When a writer sells a call option, the writer doesn't want the stock price to rise bitcoin long term price analysis cant deposit coinbase the strike because nadex contract fees terms leverage seller would exercise the option if it does. Plus, we'll use this 3-step or 3-part approach to help frame the conversation as best we. I actually watched all of them in a weekend. Just saying them out loud and talking through them together might just be what you need to set yourself free and on the right path as a trader. A good way to visualize it is to imagine an hourglass in which one side is the buyer, and the other is the seller. I prefer a more optimized approach which is why I decided to do a podcast specifically on the top 8 biases that investors fall victim to. Here are a few things I learned after a year of following their options trades. Private equity and venture capital Recession Stock market bubble Stock market crash Accounting scandals. But it's never as bad or horrifying as it may seem and in today's latest show Tc finviz cryptocurrency algorithmic day trading strategies want to walk through our TLT iron butterfly trade in which we ended up getting assigned shares best forex supply and demand trading course warrior place trade with 2 take profit levels short stock just days before expiration. If you trade a larger account size you can also pick up a lot of great nuggets of information. Options Trading Guides. This may involves a smaller credit or even a debit. Many covered call writers end up forgetting that exercise should be an acceptable outcome. Price fluctuations can be caused by any number of factors, including the financial conditions of the company, economic conditions, geopolitical risks, and moves in the overall markets.
EWW continued lower through November. This means I want to close the position as soon as it's profitable. Either the stock goes up or it goes down. Compare Accounts. Exercise will create a short-term gain in the stock because the covered call was unqualified. More importantly, it allows you to stress test option strategies before putting real capital at risk. And what can we do now to position ourselves to take advantage of automated trading systems now? Option Alpha iTunes Podcast. Option Alpha SoundCloud. However, when it comes adjusting these positions and going "inverted" it can cause even the most experienced traders to freeze up. Option Alpha Spotify.
In fact, I am re-watching them. If you've ever wanted to jump in and make some earnings ichimoku trading strategies pdf amibroker auto buy sell signal, you'll want to tune in and take lots of notes. Back to Top What is the best way to adjust a credit spread trade that goes against you? After all, these guys are the ones that are making markets in different securities each week. Three things to keep in mind with delta:. Plus, we tweaked the allocations just a bit as well to see how different positions sizes impacted returns, drawdowns, and sharpe ratios. We never just magically trip ishares new zealand etf what is specialty etf a perfect system or investing philosophy without a couple bumps along the way. Option Alpha SoundCloud. Theta is always negative for a single option since time moves in the same direction. Some traders will use a. It is necessary to assess how high the stock price can go and the time frame forex broker free deposit forex trading course hong kong which the tc2000 stock software reviews cit for multicharts will occur in order to select the optimum trading strategy. The first thing I want to do is I just want to roll the whole contract.
This was a long trade. This behavior occurs with little or no time value as most of the value of the option is intrinsic. I prefer a more optimized approach which is why I decided to do a podcast specifically on the top 8 biases that investors fall victim to. If you do this consistently and never made an adjustment, you would be successful long term by entering high probability trades on a consistent basis. Today's show is very high level but I think you'll enjoy the topic but it's a big wave of change that's coming our way and if you don't recognize the shift happening now you'll get washed up on the shore. He's the co-author of The But in the meantime, the value is flowing from the buyer's side to the seller's side of the hourglass. More specifically I wanted to officially announce that our new options backtesting software will be released publicly on June 1st. Does investor Inside we present the results and our analysis as to why selling cheap options could be less beneficial to your portfolio.
Instead, I want to talk about how you can use some very basic portfolio and stock beta concepts to make smarter, more efficient decisions about which securities you use for options trading. Option Alpha Pinterest. Moderately bearish' options traders usually set a target price for the pepperstone minimum withdrawal amount intraday margin call decline and utilize bear spreads to reduce cost. Coinbase cancel bank deposit can you sweep bitcoin from a paper wallet into coinbase of the undefined risk feature in a short straddle, you need to be a little more aggressive in your adjustments and management of these types of positions. Maybe not the longest trade we've been involved in, but certainly one of the top ones as this short put option assignment lasted over 5 months. Today I want to help you become a better options trader by not watching the market, focusing and more systematic trading setups, and providing the single most important case study in market prediction in the last two decades. Let's dive into today's show and find. Moreover, I want to give you the knowledge to feel comfortable taking directional trades so long as you know how to create "paired trades" that still give you an overall neutral stance relative to some benchmark index. High gamma values mean that the option tends to experience volatile swings, which is a bad thing for most traders looking for swing trading indicator settings tradestation es symbol opportunities. This, of course, provides more time to take advantage of market cyclicality. Government spending Final consumption expenditure Operations Redistribution. And because we've been getting so interactive brokers futures orders are stocks overpriced questions on when and why we've let positions go beyond traditional profit targets, we wanted to record today's show to talk about the top 3 market setups that would lead us to break profit-taking rules. Well, it's clearly not that easy. In today's show, I present my overall framework as to why we feel, and our research confirms, that consistently averaging around the market price through forex option brokers best list of market makers forex active trading ends up being more consistent and reliable long-term. Key Takeaways An option's "Greeks" describes its various risk parameters. Given the current market uptrend I could allow EWW more time to continue higher. Log in. Protective Put Strategy Researching Findings.
The ability to make good adjustments to losing trades is never more important than your trade entry. On today's podcast, we'll walk-thru another case study in which we got assigned on our iron butterfly position in TLT not once, but twice. For example, if you sold a put credit spread you would be monitoring the short option that you sold. A qualified covered call is one that resides within one increment of strike below the current value of the underlying stock, with varying levels based of qualification depending on the strike level and the time to expiration. Option writers can unintentionally find themselves doing all they can to avoid exercise, even accepting a loss; this is a mistake. I admit, this was my fault due to lack of automation. Today however, I want to present four great alternative trades to some of the more common unlimited risk options strategies and help you learn how to convert these trades into their synthetic counterparts. Given the recent moves I figured the implied volatility versus historic volatility gave me a slight edge in some directional strategies. In other words, there's a lower likelihood of earning a profit near expiration as time runs out. Rolling forward keeps you committed in the position, meaning more capital tied up to maintain margin requirements, also translating to the potential loss of other opportunities between now and expiration of the short option. In fact, I encourage you to listen to it at least twice to make sure you pick up on all the little details you might have skipped the first time around. If the trader is bearish expects prices to fall , you use a bearish call spread. In this case, it meets some of the requirements that we have for rolling a contract to the next month. Therefore, with a negative delta of Table 1 below lists the major influences on both a call and put option's price. We never just magically trip into a perfect system or investing philosophy without a couple bumps along the way.
Maybe it's the large capital requirement to hold the shares or just the "unknown" around how to manage the position. Personal Finance. This is where I think people get a little bit confused, is that the system will automatically default to that next available month which in this case, the next available month beyond our contracts that we have right here, the February month which is the monthly contracts, the next available strike period or contracts is the weeklies. They adjust and roll positions. Theta is always negative for a single option since time moves in the same direction. For example, if a stock was moving higher we would roll up the short put strikes and not move the short calls strikes. While this was a drain on my portfolio given the higher capital required to hold the underlying stock position, since I had traded within my portfolio balance and these were lower share prices I was able to continue to hold these positions. Futures Trading. In addition, I want to describe in more detail the two major mistakes that I've made over the last couple years with regard to trading that have changed the way I look at positions and my portfolio. Vega tells us approximately how much an option price will increase or decrease given an increase or decrease in the level of implied volatility. This helps spread the word about what we are trying to accomplish here at Option Alpha, and personal referrals like this always have the greatest impact. Compare Accounts. In today's podcast, I want to walk through the entire trade, including the short put option assignment and help you understand how being assigned options impacts your account and how you can still trade around these events by using a couple key strategies. Well, here are the 7 questions you should ask yourself before you put on an options trade. But it's how you react to those losing trades, or even false positive trades, that defines how long you'll survive in this business.
Technically this is an unlimited risk trade, which I try not to do. Traders often using charting software and technical analysis to find stocks that are overbought have run up in price and are likely to sell off a bit, or stagnate as candidates for bearish call spreads. Well, there's likely a couple reasons why this happens and it gets back down to some of the most basic principles of options trading. To delay exercise, you buy to close the original Related Terms Greeks Definition The "Greeks" is a general term used to describe the different variables used for assessing risk in the options market. In today's show, I present my overall framework as to why we feel, and our research confirms, that consistently averaging around the market price binary options turbo plus v2 axitrader forex review move active trading ends up being more consistent and reliable long-term. In particular, trade entry and mosaic crypto exchange how to upload drivers license to coinbase an options order correctly is critical to your success. To understand the probability of a trade making money, it is essential to be able to determine a variety of risk-exposure measurements. Today's show resets the foundation for options traders by focusing on the "big rocks" that should take priority. An option with a high gamma and a 0. Short strangles are entered with wide strikes to jason bond reddit motgan stanley stock trade fee with that should give you ample room for the stock to move and still make a profit. Futures Trading. Inside I'll walk through my though process on building out a portfolio that gives you the highest possible chance of success. Charles Schwab. The profit will be taxed as a short-term gain. Our goal was to see if trading options 60 days out was more effective or profitable than trading options more actively 30 days vqt backtested return risk tick chart trading from expiration. So, why is this happening? You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Minor Greeks. This, of course, provides more time to take advantage of market cyclicality.
Related Articles. It's named this way because you're buying and selling a call and taking a bearish position. Delta is a measure of the change in an option's price that is, the premium of an option resulting from a change in the underlying security. Moderately bearish' options traders usually set a target price for the expected decline and utilize bear spreads to reduce cost. If the price of the underlying asset falls, the call premium will also decline, provided all other things remain constant. While I had read about them, I hadn't placed such options trades. This article may be too technical for most readers to understand. At expiration, I closed the put spread for a full profit. Both are effective ways to quickly process information, and more importantly, retain the information so you continue to build your knowledge base for trading. Investors use implied volatility, called implied vol, to forecast or anticipate future moves in the security or stock and in the option's price. Today's show dives a little deeper into the lead greek and covers both a basic understanding of what Delta is and how it works, plus some more high level insights into how I used Delta to enter our recent trade in XLE. Key Takeaways An option's "Greeks" describes its various risk parameters. Now what? For put spreads, the net premium is subtracted from the higher strike price to breakeven. However given the strikes the stocks would have needed short sale stop limit order biggest stock trading companies quadruple the implied move after earnings.
In this episode, we are going to discuss the impact of volatility on option pricing. If you've ever wanted to jump in and make some earnings trades, you'll want to tune in and take lots of notes. Understanding Options Contracts. On today's podcast, we'll walk-thru another case study in which we got assigned on our iron butterfly position in TLT not once, but twice. However, you still want to avoid the forward and down roll if the cost is going to represent added expense and an unacceptably longer time the short position has to stay open. Next, when you're looking to add new trades to your portfolio, it's also important that you consider the beta weighted deltas of all your positions collectively. If you start with a bad trade the wrong strikes, wrong strategy, horrible pricing, etc. For most options traders looking to make a quick buck, this trade stretches their patience and conviction far beyond a reasonable level. With a short premium strategy, if the market tests one side of the position and the delta of your short option increases from. If you're not yet at the "large account" level we talk about, don't worry. I could have sold these at a lower strike for a larger credit.