reverse iron butterfly trading strategy

Rajandran R Follow Founder of Marketcalls and Co-Founder Algomojo. Regular Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Patronage Automation.

Reverse Iron Butterfly Strategy for Nifty

March 17, 2010 1 min read

As there is a moo volatility prevailing in the grocery store and most of the bullish hoi polloi are expecting a breakout either above 5300 levels. For those WHO people who are expecting a gaolbreak above 5300 levels before expiry hither is a safe scheme to exercise. Its known as Reverse Iron Butterfly Strategy. The reverse press chat up strategy is designed to take vantage of acuate swings in the underlying security

A reversion press chat up reveals that the strategy is fundamentally the combination of both a long call spread and a long put spread, with the purchased options imbrication connected a center strike. In rescript to originate a reverse press butterfly, the trader sells an unfashionable-of-the-money put back and an out-of-the-money scream, while simultaneously buying an at-the-money put and an at-of-the-money outcry. Each tetrad options will have the same expiration date.

In this pillowcase i had sold the tabu of the money call dannbsp;5300 and out of the money put 5100 and bought 5200 call and 5200 put.

Net profit Investment = [(Long 5200call + Long 5200 put)-(Short 5300 call + Short 5100 Commit)]*50

Net Investment = [(54.55+45.8)-(16.9+18.5)]*50 = Rs 3247

Even if marketplace reverses against your expectation and falls gravely and expires below 5150 you are departure to gain the same profit what you are going to gain on the upper side break. You will incur loss only if nifty choke scope furled between the lower breakout point 5135 and the upper breakage even off point 5264. Else you will be in safer hands of profit

Nifty CMP : 5198

Type	Strike	Expiry	Quantiy	Agiotage
Curtal Put	5,100.00	25-Mar-10	50	18.5
Long Put	5,200.00	25-Mar-10	50	45.8
Long Call	5,200.00	25-Mar-10	50	54.55
Short Call	5,300.00	25-Mar-10	50	16.9

Max Loss = Rs 3247 if slap-up expires at 5200

Max Profit= Rs 1752

Expiration will incur if nifty expires between the breakout points

Look the strategy graph to get a clear idea

I would request my member to wallpaper trade this strategy and to study the results of such a safer scheme

Rajandran R Follow Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Dealer. Expert in Scheming Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Mechanization.

#Options Strategy
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