Broken Wing Butterfly Example -AMZN

This is a bullish trade.

A BWB structured like this (OTM, for a credit) is somewhat similar to an OTM Credit spread, except that: if the stock starts to move down, it actually makes money (up to a point), with max profit actually at a lower strike (short Put strike) than the current price -one could argue its a Bearish trade then.  Whatever, as long as you make money!

Buy 1, sell 2, buy 1 further away and wider.

If the stock rallies, you just keep the credit (like a credit spread).

If the stock goes past the further OTM long strike, it starts to lose money. Of course you might be closing the whole position for a profit once it gets to the 'short strike, so you'd be long gone (unless it does a big gap).

Max risk is the: wide spread - narrow spread (20-10) -Credit (2.14), so 7.86

This is a solid gold strategy, if one takes the time to understand it!

NFLX -Demo Bearish 'broken wing butterfly (BWB)'

Current P&L 09/25



P&L 09/22

09/22  P&L chart
Will close this position soon, with almost $1000 profit (if it keeps on the right track).
This was done for a Debit, so if it went the wrong way, it would be losing.

Price chart -was clearly in a downtrend

Here is another BWB that was established at the same time, but with shorter duration..
It ran out of time, but was a small winner anyway -different structure too (was done for a Credit).
All strikes expired out of the money.

Support & Resistance

Sample charts...

INTC -bottomed out and reversed at a support level

AMZN -reversed right near a support level. Watch for potential resistance at the upper level now...
Maybe even at one of the other levels, before the one drawn like 1900ish...

TSLA -reversed at a support level, but on a much longer time frame

SPY -failed rally today

Market update -Oct 2018 high

The extended SPX market rally (live chart) is broken until it takes out the 2018 Sep/Oct double top/all time high, and holds...

It's been struggling to get past that area 3 times already, since Jan 2018