This Broken Wing Butterfly Strategy Works!

In this video, I’ll breakdown a broken wing butterfly strategy. This broken wing butterfly strategy is designed to be mechanical and …

47 thoughts on “This Broken Wing Butterfly Strategy Works!”

  1. Great video. Thanks for sharing. What chart do you use to determine the 3ema above the 8ema? Is it a daily chart, 60 minute chart, 30 minute chart, etc? I assume it's the daily chart, but would like a confirmation. Sometimes, the daily chart indicates the 3ema is indeed above the 8ema, but the 60 or 30 minute chart would indicate otherwise as the market turns negative towards the end of the trading session

  2. great video – question: what chart time frame do you use on monday afternoon for the 3ema vs the 8ema?

  3. Looking at the video more closely? I'm surprised that there were only seventy four trades in five years which is over two hundred and fifty weeks.


  4. few questions. Have you back tested the opposite? 3 below 8, Call credit or Put debit BWB spread? I know you have a set it and forget it style here, but have you tested a take profit of same? Like $300? That or if during the period, seeing that the max profit is ~ 300, take a profit defensive position?
    Is there in your review a condition where despite the EMAs being in a let's do it position, you see conditions that says pass? Something like VIX over and above and trending up favoring a call debit BWB spread or the Put credit BWB spread? If not VIX levels then a ADX level?

  5. Thanks for sharing. Do you mean that EOD data which is Friday's daily chart? Since 3EMA ,8EMA on different time frame charts which shows a different trend. If EMA conditions are not met, does it mean no trade on Monday? and having no trade in whole week as well since the strategy applied on Monday? Do I get your point? Thanks for your time.

  6. i like this idea a lot, considering this and trades like the 1-1-1 to add into the mix. my only concern is, the delta 55 short strike appears to already be ITM, is that correct? so you really are reliant on that short term strength to hold up for this to work.

  7. Hi I know these are old videos but wondered if you could help me. Recently subscribed to this channel and interested in the broken butterfly strategy. I haven't entered the trade yet as unsure of the risk. Its saying I can open for a credit of .14cents but max profit 314, max loss 1286, probability was around 90% success rate. I thought if you open with a credit then you can't loose? It's JPMorgan oct14th short 2x 96put, long 1×80 put, long 1x 99put

  8. FINALLY!!!!! FINALLY FINALLY!!!!! A clear and simple explanation as how a strategy works and how to set it up n tastyworks!!!!

  9. Thank you very much – I was asking What platform (in the video – very visual & and practical platform! ) and broker do you use to place your trade – I want to join your membership and i want to use the same tools you are using'

  10. I love IBF and BWBF strategies, but I prefer to do it on day trade basis, only credit positions where theta depreciation is on my side not against me and opening the position at the highest volatility rank possible, so when the volatility goes down is instant profit. Now the SPX have daily expiration dates, you can play the strategy every day. Remember it won't count as a day trade if you let it expire, but be aware in case that you need to close your position before expiration, if you do not have available day trades you better do not open a 0DT position. Those are my preferences each trader must find which is the best strategy for itself.

  11. Maybe this worked in 2021 or in a long bull market but it's not working this year At least its a 50/50 shot at best You can place a trade when the 3 ema is above the 8 ema on Monday and spx can turn on dime and head lower for the next 4 days like on Jun 27 2022 You have a better chance with a symmetrical fly if you are placing it ATM otherwise you could place a short vertical ATM and have an equal chance of win/loss The one strike higher option is not going to protect this trade from a loss it's just reducing the gain also Looking at the graph zoomed in is useless You can see that just 10 points lower and you start losing money and SPX can easily move 1-2% per day

  12. so the call BWB – why don't you buy one strike lower and two strikes higher ? getting a credit – this woudl be a Short CALL BWB

  13. Can you invert this trade for times when the 3 ema is below the 8 ema using probably 60 delta put side and 40 delta call side as center of BWB?

  14. Great video on BWB strategy. My comments: 1) The Call BWB: the short call spread should be 2 strike price distance, and long call spread should be 1 strike price distance. This call BWB is a neutral or slightly bullish strategy. 2) The Put BWB: I think the delta should be 0.45 for 2 short positions instead of 0.55 delta. Because it's a neutral or slightly bearish strategy to maximize the profit. Of course there is no issue if the stock price moves upside. I learned a lot from your channel. Hope my comments make sense. Thank you very much.

  15. I think another set up criteria to add is price is above 200 day SMA. Would be interesting to see how that impacts return. This would help you keep out of large sell offs…

  16. So, just to be clear!.. the only reason you would look to put on a Call BWB vs. Put BWB is if you have a position on the put side of the same weekly expiration cycle already on, and not because of any statistical ( probability) advantage over the other one?? Excellent content by the way. Thanks, very very useful.

  17. Appreciate if you could clarity these 2 items:a)Could you please explain ?So what is cash settled means? the account is credited with the loss amount from trade , and you need to have capital /cash to cover it? b) The 3 ema / 7 ema – chart you showed, are these daily charts of 3 months or the daily at 15/30/1hr chart? to see the trend.. TIA

  18. This is a great video! I love the Broken Wing Butterfly. Such a great strategy. All you have to do is remember that every option strategy is just buying and selling puts or buying and selling calls. That's it.

  19. This is my favorite BWB video.
    You explain it step by step, when you should do the trade, and what the expected outcomes are. Your responses to the questions in the comments were additional help. Thanks!

  20. Hi there! Wondering if you have been trading this strategy lately, given the bearish sentiment and high swings of the market. Just came across your channel . Thank you for sharing your knowledge. If you do still employ this strategy, how’s the result so far? Thanks.

  21. When you say "this strategy is to be used with SPX only as there is no assignment", not sure what you mean. You cannot trade SPX, it is only an index. Can you please explain.

  22. I separate the spreads. 1 debit spread 3 credit spreads. Higher risk more buying power but better probability of profit with max gain if the debit goes in the money and credit stay out of the money. You can usually close it down when the debit spread goes itm for a small profit. An imbedded butterfly will have to be held until exp day 99 percent of the time and be subject to gamma risk.

  23. Do u always play the 'bullish' side? What if there is a strong bearish trend (ie… 3ema is below the 8ema). Why not break the wings in the opposite direction and ride that bear wave to profit$ ?

  24. With rising interest rates affecting the stock market, I'm taking a view point of a bearish market, not a bullish market. What about applying the broken wing to the other side for bear market? E.g., 3 ema BELOW 8 ema, then have the losing side on rising SPX price, winning side on falling XPX price? BTW: I've been trading options for years, and was unaware the SPX was cash traded! I had it confused with the futures contracts, which have much higher prices – Thanks for this insight!

  25. I wonder how the small spread pays out, hitting exactly there might be difficult. In your case to the upside no risk, would that then the result of the majority of the trades?

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