Today we're looking at a strategy based on the overall market, a long butterfly with puts. You can find this on page 104 of the Options Playbook, or you can always find it on OptionsPlaybook.com
Specifically:
- Looking at the overall market: where is the S&P 500?
- Will there be a new all-time high, or will there be a pullback?
- European verus American style options
- Weekly versus monthly options
- Setting up the trade
- Maximum risk & profit
- What will happen to implied volatilities?
- Contingency plans
