We are continuing the discussion of options pricing. This week we take a deep dive into pricing of a butterfly.
Specifically:
- Looking at a 10-day butterfly in AAPL
- Picking a five-point spread
- What strikes and expirations to choose?
- What will this cost?
- What is the maximum risk and reward?
- What do we want to happen?
- What impacts the pricing of butterflies?
- Managing expectations
- Looking at the same thing for a November 17 expiration
- What is the ideal scenario?
