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No. of Recommendations: 2
The risk for this strategy is actually quiet low...

And the counterparty knows this, and that's why they are willing to give you a fat profit?

The market has been zooming up for the last several years. There are many strategies that will work fine in such a market ---- but will crash hard in any other type of market.

Your profile says that you've been fine-tuning and perfecting your options strategy for 2 years. When the market finally decides to do something other than going straight up, all your tuning & strategies will go right out the window.

To repeat: "Stock market history is littered with people who misunderstood the risks they were taking on."

David E. Hultstrom, of Financial Architects: "Derivatives are a zero sum game that requires someone else to lose money for you to make money. That is unlikely to happen consistently."

"Options (like futures) are a zero sum game. The ONLY source for the winners' cash is from the losers' hides. In options, no money is created or destroyed; it simply is shifted from the writers to the buyers, and back again."

Hmmm, well, okay, I decided to see what I can find about long iron butterfly via google.

Offhand, it sounds like a complicated strategy that would dazzle beginners that think complex = profitable.

"involves four options" -- therefore you'll have a lot of friction due to commissions and bid/ask spreads.

Looks like small risk and small upside profit.
"Maximum Risk = Limited to the difference between the strikes minus the net credit
Maximum Profit = Limited to the net credit "

"Who Should Run It: Seasoned Veterans and higher
Due to the narrow sweet spot and the fact you’re trading four different options in one strategy, long iron butterfly spreads may be better suited for more advanced option traders.:

Read more at:

Sounds like the most profit goes to the person (*cough*buddy46*cough*) who runs a for-fee service.
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