Managing a Winning SPX Butterfly

Hey traders!

Video Requests

A few weeks ago, I sent out a request for video topics. I was surprised to hear that the most requested topic was how to manage butterflies. You see, I try not to make videos about when I’m closing a trade, because in the past when I have done that, people say, “Well, that isn’t helpful! I want to know when you get in! Thanks for telling us you made money…”

So, I haven’t done it for quite some time. Anyway, after I received many requests for how to manage trades, along with questions like, “How do you know when to take profits on butterflies?,” I decided I would simply record myself when I’m closing trades. This, of course, will lead to some videos about losers, as well!

In these videos, it’s my goal to explain my thought process of how and why to close the trade, along with an overview of why I got in. So, let’s consider it my video-recorded trading journal! It’s through the trading journal that you learn how to continually sharpen your edge.

SPX Butterfly at 5000

This morning, I had a trade on in the SPX, with a target at 5000. This was a trade I put on late last week, so it was a swing trade, not a 0 DTE SPX butterfly. When I placed it last week, I wasn’t sure about the exact expiration date, but I wanted to give myself about a week. I placed this trade when the SPX was at about 4965. I had a target of 5000.

I used a $30 wide butterfly, which meant my fly was at the 4970/5000/5030 strikes. It was just out of the money when I placed it for a debit of $5. Today, the SPX reached just a few cents below my target, so I decided to close out the trade for a 70% win for $8.40.

Check out a screenshot of the SPX on a 78-minute chart below:

SPX Winner Video Analysis

I commonly get questions about butterflies as it relates to whether or not you should hold for a ‘perfect pin.’ In this case, this trade was not a perfect pin. What is a perfect pin? A perfect pin would be if the SPX was at 5000 the day of expiration. In this case, my trade still had 2 days of life on it. So, my expiration was not perfect. This is why the trade was up 70% instead of 500%, which it could have realistically been at if the SPX was at 5000 on the day of expiration, and I had held it. So, often times people will ask me why I’m getting out when I ‘could have made so much more.’

Want to learn more? Check out my video with my complete thought process below!

 

Up Next...

A Sorely Needed Pullback…

Hey traders! The market is finally pulling back today after what has been a phenomenal run. While pullback days aren’t very enjoyable when you’re long, ideally, you’ve been taking profits on the way up and trimming positions at market extensions. As I was on vacation, I have been flat, minus a small position I entered … Read more

Read More

Top Hot Zone Tickers Today…

Hey Traders! I’m back from vacation and ready to locate some setups. Whenever I come back from a break, I have a regular process I do to identify spots to focus on. It goes something like this… Start with the major indexes (Nasdaq, S&P) and the Magnificent 7 stocks (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, … Read more

Read More

Happy 4th of July!

I hope everyone is enjoying their summer so far and looking forward to the shortened week! If you’re here in the United States, I hope your holiday is safe and enjoyable. I will personally be taking some time off this week to spend time with family and enjoy the holidays. I love cooking with my … Read more

Read More

Subscribe Today!

Want my up-to-date analysis, setups, top trading tips, and more? Be a Five Star trader, and join my free newsletter today!

Sign Up Now
all-as-seen-on-logos