1. What is an iron fly
2. Perks and Drawbacks
3. What to do when in profit?
4. How to adjust when in loss?
5. Thread on How to keep shifting an iron fly for max credit?
6. Risk-free trades benefits
Let's dive in ↓
The most valuable hedging strategy you aren't using:
The IRON FLY STRATEGY.
Knowing how to use it will protect you from gaps and intraday spikes and 10x your hedging experience.
Here's the step-by-step guide:
Collaborated with @niki_poojary
1. What is an iron fly
2. Perks and Drawbacks
3. What to do when in profit?
4. How to adjust when in loss?
5. Thread on How to keep shifting an iron fly for max credit?
6. Risk-free trades benefits
Let's dive in ↓
Sell ATM CE and PE (Short straddle)
Buy OTM CE and PE (Hedge it by buying on both sides)
Look at the picture below for an example of an iron fly in current weekly options.
Many traders want to receive maximum theta or max credit.
This is why they sell straddles.
But straddles have unlimited risk in them, and can't handle gaps or intraday spikes.
This is why traders like knowing the maximum loss in their trades.
Low capital required—Possible to buy first, sell later
Limit losses—Know your maximum loss upfront
Adjustments—Can reduce losses to zero or almost nothing
Weekly earnings—Possible on a weekly basis
Jackpot—Potential for a jackpot if it expires in middle
Low Probability—If you want a low max loss, the probability is less than 30%
Higher Brokerage costs—Since there are 4 legs and then you will add 3-4 more to adjust costs will be higher
Slippages—Want to free margin from itm strikes, slippages are high
Apply price action and combine your strategy along with your view and technical analysis.
If good in technicals, then can increase the odds of success.
This will fetch you more money than blindly selling iron flies every week.
Technicals increase ROI.
When in profit usually, traders square off their buy legs and buy 1-2 strikes closer.
The aim is to—make the maximum losses even lower than when you started the trade.
Once this is very low, can even stay in the trade for a jackpot.
Since the initial range is small, when in loss, traders want to extend the range of the fly.
They pump in more capital and open another iron fly or a broken wing fly (buy just one side and not two like iron fly).
This way the payoff becomes better.
There are multiple ways for different scenarios.
Very good content on Youtube regarding this.
I will have to do another thread on just the adjustments.
I already mentioned that if you are good at technicals you can use iron fly to have a very good risk-reward trade on your hands.
For eg, in the current week, if your view was bullish instead of selling ATM straddles, you sold 4-5 few strikes above ATM.
I found good content about them on @kapildhama Bhai & @SarangSood Sir's handles.
Both have been extensively doing iron flies for a few years.
Also attached Nitin Kamath's article on trading via strategies.
Shows you how to adjust an iron fly.
Intuitively understand what you are doing.
(@SarangSood)
https://t.co/S6r5IXy3dP
THREAD ON IRONFLY
— Sarang Sood (@SarangSood) December 12, 2020
These days the most preferred strategy for option sellers due to improved margins is IRONFLY. It's essentially a short straddle with long strangle. Long strangle acting as 'WINGS', which help in capping the unlimited risk associated with a short straddle.(1/n)
Can wait for a jackpot
Avoid getting out early with small profits, he believes if you book the strategy out fully in small profits
over the long run hard to make money
as we take full losses when wrong.
(@kapildhama)
https://t.co/RcSwZBknZh
Thread on Iron fly\U0001f447
— Kapil Dhama \U0001f1ee\U0001f1f3 (@kapildhama) August 19, 2021
Many people ask me what is the benefit if we make Iron Fly loss free
last week we made a 35900 Iron fly, and market closed at 35500, if we didn\u2019t make if loss free then we would get max 50 points and if market fall below 35500 then we will book loss
(1/4) pic.twitter.com/8wQ1uO7zCb
I asked @SarangSood Sir a question, he used to sell an iron fly before expiry day every week.
Good pointers from him and @kapildhama Bhai.
Can read this thread for their answers.
https://t.co/p28hU5LgIS
Why do you sell an iron fly every Wednesday? What are the perks of doing it versus selling naked?
— Aditya Todmal (@AdityaTodmal) August 29, 2020
I sell strangles 99% of the time. No hedge.
Which one is a better strategy to make more money on Thursday opening? @SarangSood
Sell next week straddles as they will have huge premiums.
Buy current week options to hedge them as they will be very cheap.
If anywhere near the center can make good money.
(@kapildhama)
(@shubham_quant)
https://t.co/k1GRkq1BCM
Even he has suggested trading through strategies keeps traders profitable over the longer run.
(@Nithin0dha)
https://t.co/qq5hePi9Ue
If you enjoyed this thread:
1. Follow us @AdityaTodmal & @niki_poojary for more of these
2. RT to share this thread with your audience
Here's another thread we think you'd like:
https://t.co/SrfYWVaLt7
12 TRADING SETUPS used by professional traders:\U0001f9f5
— Aditya Todmal (@AdityaTodmal) June 25, 2022
Collaborated with @niki_poojary
More from Aditya Todmal
Curated tweets on How to Sell Straddles
Everything covered in this thread.
1. Management
2. How to initiate
3. When to exit straddles
4. Examples
5. Videos on Straddles
Share if you find this knowledgeable for the benefit of others.
1. Straddles explanation from the boss himself.
Everything covered in this thread.
1. Management
2. How to initiate
3. When to exit straddles
4. Examples
5. Videos on Straddles
Share if you find this knowledgeable for the benefit of others.
1. Straddles explanation from the boss himself.
How to sell option?
— Mitesh Patel (@Mitesh_Engr) January 30, 2021
Here let me explain through simple math.
Say BN at 30000
30000 straddle trading at combine premium 800 ( based on current volatility)
Put at 400
Call at 400
You don\u2019t know direction. Sold both.
If move will not come than both will decrease gradually.
12 TRADING SETUPS used by professional traders:🧵
Collaborated with @niki_poojary
Here's what you'll learn in this thread:
1. Capture Overnight Theta Decay
2. Trading Opening Range Breakouts
3. Reversal Trading Setups
4. Selling strangles and straddles in Bank Nifty
6. NR4 + IB
7. NR 21-Vwap Strategy
Let's dive in ↓
1/ STBT option Selling (Positional Setup):
The setup uses price action to sell options for overnight theta decay.
Check Bank Nifty at 3:15 everyday.
Sell directional credit spreads with capped
@jigspatel1988 2/ Selling Strangles in Bank Nifty based on Open Interest Data
Don't trade till 9:45 Am.
Identify the highest OI on puts and calls.
Check combined premium and put a stop on individual
@jigspatel1988 3/ Open Drive (Intraday)
This is an opening range breakout setup with a few conditions.
To be used when the market opens above yesterday's day high
or Below yesterday's day's
Collaborated with @niki_poojary
Here's what you'll learn in this thread:
1. Capture Overnight Theta Decay
2. Trading Opening Range Breakouts
3. Reversal Trading Setups
4. Selling strangles and straddles in Bank Nifty
6. NR4 + IB
7. NR 21-Vwap Strategy
Let's dive in ↓
1/ STBT option Selling (Positional Setup):
The setup uses price action to sell options for overnight theta decay.
Check Bank Nifty at 3:15 everyday.
Sell directional credit spreads with capped
A thread about STBT options selling,
— Jig's Patel (@jigspatel1988) July 17, 2021
The purpose is simple to capture overnight theta decay,
Generally, ppl sell ATM straddle with hedge or sell naked options,
But I am using Today\u2019s price action for selling options in STBT,
(1/n)
@jigspatel1988 2/ Selling Strangles in Bank Nifty based on Open Interest Data
Don't trade till 9:45 Am.
Identify the highest OI on puts and calls.
Check combined premium and put a stop on individual
Thread on
— Jig's Patel (@jigspatel1988) July 4, 2021
"Intraday Banknifty Strangle based on OI data"
(System already shared, today just share few examples)
(1/n)
@jigspatel1988 3/ Open Drive (Intraday)
This is an opening range breakout setup with a few conditions.
To be used when the market opens above yesterday's day high
or Below yesterday's day's
#OpenDrive#intradaySetup
— Pathik (@Pathik_Trader) April 16, 2019
Sharing one high probability trending setup for intraday.
Few conditions needs to be met
1. Opening should be above/below previous day high/low for buy/sell setup.
2. Open=low (for buy)
Open=high (for sell)
(1/n)
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MDZS is laden with buddhist references. As a South Asian person, and history buff, it is so interesting to see how Buddhism, which originated from India, migrated, flourished & changed in the context of China. Here's some research (🙏🏼 @starkjeon for CN insight + citations)
1. LWJ’s sword Bichen ‘is likely an abbreviation for the term 躲避红尘 (duǒ bì hóng chén), which can be translated as such: 躲避: shunning or hiding away from 红尘 (worldly affairs; which is a buddhist teaching.) (https://t.co/zF65W3roJe) (abbrev. TWX)
2. Sandu (三 毒), Jiang Cheng’s sword, refers to the three poisons (triviṣa) in Buddhism; desire (kāma-taṇhā), delusion (bhava-taṇhā) and hatred (vibhava-taṇhā).
These 3 poisons represent the roots of craving (tanha) and are the cause of Dukkha (suffering, pain) and thus result in rebirth.
Interesting that MXTX used this name for one of the characters who suffers, arguably, the worst of these three emotions.
3. The Qian kun purse “乾坤袋 (qián kūn dài) – can be called “Heaven and Earth” Pouch. In Buddhism, Maitreya (मैत्रेय) owns this to store items. It was believed that there was a mythical space inside the bag that could absorb the world.” (TWX)
1. LWJ’s sword Bichen ‘is likely an abbreviation for the term 躲避红尘 (duǒ bì hóng chén), which can be translated as such: 躲避: shunning or hiding away from 红尘 (worldly affairs; which is a buddhist teaching.) (https://t.co/zF65W3roJe) (abbrev. TWX)
2. Sandu (三 毒), Jiang Cheng’s sword, refers to the three poisons (triviṣa) in Buddhism; desire (kāma-taṇhā), delusion (bhava-taṇhā) and hatred (vibhava-taṇhā).
These 3 poisons represent the roots of craving (tanha) and are the cause of Dukkha (suffering, pain) and thus result in rebirth.
Interesting that MXTX used this name for one of the characters who suffers, arguably, the worst of these three emotions.
3. The Qian kun purse “乾坤袋 (qián kūn dài) – can be called “Heaven and Earth” Pouch. In Buddhism, Maitreya (मैत्रेय) owns this to store items. It was believed that there was a mythical space inside the bag that could absorb the world.” (TWX)
