152: Short Straddle Or Short Iron Butterfly?

The Option Alpha Podcast

Kirk Du Plessis

Education, Options Trading, Trading, Investing, Stock Market, Business, Finance

4.8 • 1.2K Ratings

🗓️ 21 January 2019

⏱️ 41 minutes

🔗️ Recording | iTunes | RSS

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Summary

Show notes: http://optionalpha.com/show152 You're looking at a great setup for a neutral trade, but which neutral strategy do you use? Short straddle or short iron butterfly? It's a question we get all the time and today's podcast focuses exclusively on the trade-offs of using one strategy over the other. And while both strategies are built using the same core short straddle position, the choice of adding protection or not using long OTM options can sometimes lead to analysis paralysis. So, l...

Transcript

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0:00.0	You're listening to the Option Alpha Podcast from Option Alpha.com where we show you how to make
0:06.3	smarter trades learn how the stock market really works and generate consistent monthly
0:11.2	income. Now your host and head trader at
0:15.0	option alpha.com Kirk depluses.
0:20.0	Hey everyone this is Kirk here again from option alpha
0:22.0	com working every single week to make this the most Hey everyone this is Kirkier again from option offer
0:22.8	working every single week to make this the most popular investing
0:26.1	podcast offered online because it's based on one thing and one thing only and
0:30.4	that's helping you make smarter trades.
0:32.5	So again, thank you so much for tuning in today.
0:34.6	On today's show, we are going to be talking about short straddles
0:39.2	or short iron butterflies.
0:41.0	And basically, trying to give you guys all the tools at your disposal to
0:45.3	differentiate between these two types of strategies and also decide which one is best for whatever
0:51.3	particular setup you're looking at.
0:53.2	Now of course it's one and the same, right?
0:55.7	So a short straddle is the same as a short iron butterfly
0:59.1	in that a short iron butterfly is composed of a short straddle with outside protection.
1:04.2	So they're one and the same.
1:05.4	They're synthetics.
1:06.0	They act very similar to one another in many cases, but there are little differences that
1:11.1	we should go over that will help you and again the
	...

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