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How To Turn a Boring Options Strategy Into An Exciting Explosion of Profits

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“How To Turn a Boring Options Strategy Into An Exciting Explosion of Profits”

…It’s the bread and butter trade of most floor traders on the CBOE and heres’s their secret


Dear Trader,

“Butterfly spreads are not a high probability trade” I told him.

Even though he spent 20 years as a floor trader on the CBOE, I thought I knew better than he did.

That’s how stupid I can be sometimes! I thought I knew all about butterfly’s!

That’s when my mentor told me, “…butterfly spreads were the bread and butter trade of most of the floor traders I knew on the CBOE…”

I didn’t say it, but was thinking, “What? How?”

I studied butterfly spreads extensively and didn’t like them for several reasons:

You can’t put them on for a credit, only a debit,

You have to hit the short strikes ‘perfectly’ for a decent profit,

Yes, they were inexpensive to put on, but they also had a low probability of winning,

And finally, butterfly’s are boring!

But he said almost every floor trader never put them on as a ‘debit’ spread… they always got them as a credit spread.

I said, “Well they are floor traders, so that’s easy”.

He said, “Floor traders have to place their trades through the market maker for that stock and the last thing a floor trader wants to do is give another floor trader an edge, so they would never put on a butterfly for them at a credit”.

“So how did they do them for a credit?”

“That’s the secret,” he said – and he laughed as he said it, teasing me for the answer!

I was a bit agitated at his elusiveness, but knew he would finally give me the ‘secret’ so I just stayed silent until he spilled it.

“Ok”, he said, …”here’s the deal. They don’t enter them as butterfly spreads”

He went on to tell me how, actually, you can sometimes get away with sending an order in on a butterfly spread with a credit and get it filled, but it’s rare and only when volatility is high.

If volatility is at normal levels, typically you have to get ‘creative’ with the order.

So as I listened to how it was possible to create butterfly with a credit – using both methods – it made total sense to me. I got it and realized that the simplicity of it guaranteed it would be an effective way to get a butterfly at a credit almost every time – no matter what the volatility level was.

He said, “Once you get a traditional equal wing butterfly at a credit, it was hard to lose money. As a floor trader, we did not pay commissions so it made a lot of sense to do them – as many times as possible for a credit because it cost us nothing, and occasionally we’d have a big win when they settled at our short strikes.”

It was not a new idea to me actually, but I guess it was over my head, or I just didn’t ‘get it’. I first learned of the strategy he was talking about while reading Charles Cottle’s book, “Options Trading: The Hidden Reality” several years ago. To be honest, it’s pretty technical reading and I thought difficult to translate it into a viable strategy for anyone other than a floor trader. I didn’t see the ‘bigger picture’, but when he started talking about it, all the missing pieces in Cottle’s book fell into place, and I could finally understand how retail traders like us could use it successfully.

The whole conversation started because I was wondering if there was a way to generate options income without adjustments, extensive monitoring, and maintenance.

As he continued to discuss it, and remembering what I read in Cottle’s book, the thought occurred to me that commissions are extremely low at some brokers and this could be a viable strategy for the retail trader now.

He agreed, and thought it could be viable, IF they followed the floor trader’s strategy of always getting them at a zero debit or, better yet, at a credit so that trader would only be out the commission if they expired outside the ’short strike sweet spot’.

And then he revealed the biggest secret of making these work. He alluded to it when he said to do them “as many times as possible” but I didn’t really ‘get it’ the first time I heard him say it.

It’s like the first time you see a movie then watch it again – the next time you watch it you’ll notice something you missed the first time.

So as he demonstrated the idea behind ‘as many times a possible as long as you can get them at a credit’ along with the images in Cottle’s book – the light bulb finally lit up in my tired, old, trader’s brain.

And it was exciting. My mind was blown so I named this strategy “Butterfly Bombs” or b-bombs. Cottle calls them ‘pregnant butterfly’s, but I like ‘b-bombs’ better 🙂

After he explained the method a bit more I thought about all the benefits of this floor trader’s method of making butterfly’s work for us including:

No adjustments necessary

The strategy neutralizes the Greeks

It provides regular, steady and consistent income – if done according to directions

The positions have very little maintenance

Volatility does not impact the positions negatively – and in fact – can help on entry

It’s a safe way to put large chunks of money to work, and get outsized returns without the usual high-risk of other types of positions

Monitoring positions – even with multiple expirations – is E A S Y

It’s essentially a non-directional strategy – no technical analysis required

Now there was an additional strategy he mentioned called a ‘broken wing’ butterfly which are the ones I’ve been using for the past 6 months (before I started with ‘b-bombs’) and in this course I talk about them first because they are still relatively a good ‘set and forget’ trade. All the above benefits apply to broken wing butterfly’s too, except that the margin requirements are higher, it is a ‘directional’ strategy and some basic technical analysis does increase the probability of success.

But I included it because it does provide yet another way to generate option income, with relatively low risk, on a consistent basis.

I call the two strategies together, “Better Butterfly’s”…

The Better Butterfly’s course includes 10 videos in all and includes both ‘broken-wing’ and ‘b-bomb’ butterfly’s:

Introduction to Butterfly’s

Basics of Butterfly’s: TILL • PLANT • HARVEST

Building the Better Butterfly – Part 1

Building the Better Butterfly – Part 2

What’s a “Butterfly Bomb” and How To Plant Them

Questions and Answers on Better Butterfly’s

B-Bombs Case Study #1 – Analysis

Analysis of Butterfly Bombs and Costs of Deployment

Monitoring and Harvesting Butterfly Bombs

B-Bomb Case Study #2 – Expiration Day

These are the best way, in my opinion, to trade for income today in the options market.

I hope you enjoy them and I will provide unlimited support and answer any questions you have in the chat room of Tradingology’s Slack channel.

Best wishes and much success,

Dave Vallieres

Founder, Tradingology

Get The Better Butterfly Course – David Vallieres, Only Price $57


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The Better Butterfly Course  -  David Vallieres
The Better Butterfly Course – David Vallieres
Original price was: $497.00.Current price is: $57.00. Add to cart