Option Trading - Very Low Risk & Great Returns (1 of 3)

[pwells01]

Why do you start at the point of profit of $3,000? Start at the beginning of the trade with current P/L of $0. From the graph, it looks like a typical BWB.

[sjoptions]

Yes, this is a variation of a Broken Wing Butterfly with some other spreads combined and profits locked in. Thank you.

[sjoptions]

Hi, we exit these trades long before we get to that point. Also, you'll need to balance Vega in some cases as this approaches the profit zone. You'll notice that the negative Vega will increase as you get closer, so if needed, then we use some positive Vega hedge in addition to a trade like this. Thank you for your comment and I hope this helps a little bit.

[ceed4eva]

what hapens if the stock falls to $500. you have not said anything about such a move