Recommended Paper Money trade entry for Wednesday, February 24.
Please note: As this is a new trade, it is recommended to follow along or trade with Paper Money until you are totally comfortable with the position, and the risks involved.
Option Code: SPXW160506
Expiration: Friday, May 6
Recommended Trade Entry:
- BUY 3 SPX May 1 1915 Put
- Sell 6 SPX May 1 1875 Put
- BUY 3 SPX May 1 1825 Put
It is recommended to place the order as a single entry:"BUY BUTTERFLY".
Current mid price for all three legs: $.45. Fills can be extremely difficult for this position; open interest is very low because it is so far to expiration. The bid/ask price is very wide, and the mid price varies greatly. It sometimes may take .20 or even .25 over the mid price to get filled.
Update will be posted with exact fill prices when the trade is opened.
The margin on this 3-unit position will be $3,000 plus the debit for the butterfly (before commissions).
For those unfamiliar with the strategy, the guidelines were posted on February 17, 2016, and the link can be found here: Link to Articles
Again, it is recommended those interested in this longer-term play either follow along from the sidelines, or paper trade it until you are totally comfortable with the position, management, and risks involved.
As always, stay keen on your risk management and trade carefully,