RUT Butterfly and an XOP Strangle

Well we are breaking 1400 as I write this and again I am not super convinced. Not to say I’m really bearish, but I would’ve thought some consolidation or some sort of retracement would have played out by now. I might be early to call for those things, but soon enough we will get some market weakness unless QE is announced.

Today I went ahead and set two new trades, the first is on the RUT, its a very small trade, only a one lot. The next trade is a XOP strangle, and again trading small at two lots.


2 thoughts on “RUT Butterfly and an XOP Strangle

  1. Hi Phillip, very cool blog. I think I first linked to it via Twitter. I run a similar options-based hedge fund. I was curious to know what your profit / risk targets are? Particularly for butterflies and strangles such as above? I find strangles particularly troublesome when looking at my overall portfolio risk as they have lots of tail risk. Previously I traded mostly strangles as rolling premium generators, but found the P&L swings too large. To get more smoothed, less volatile returns, I am now doing mostly covered trades (condors, butterflies, and spreads). Cheers.

    • Graham, thanks. My profit target is based off my max margin for covered trades and I typically aim for 10-15% of max margin. I will also have my loss set off max margin around 5-10%. I trade a lot of strangles and I do understand the risk involved, but unlike condors I’m able to set the shorts wider creating a higher probability while collecting more credit. For strangle I don’t try to capture all the premium, rather I will aim for 20-30% cash flow. Please keep in touch and if you ever want to bounce trade ideas around you can email me at

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s