Butterflies – Starting point, xDTE, Indexes or Stocks

Butterflies are usually tough to nail down, especially when you’re still building intuition around Greeks and timing. The main thing I’d say is that most butterfly traders target 30-45 DTE and aim for the strike to be near the current price (ATM or close to it) because that’s where you get the best risk-reward setup. Delta-wise, you’re usually looking at a short call or put around 0.30-0.50 delta for the wings, which keeps your max loss defined but gives you a reasonable probability of profit. The issue is that SPY moves a lot, so small butterflies can get crushed by gamma. Have you considered starting with a tighter range or looking at what other traders are actually setting up? We built FunRobin to help with exactly this kind of discovery – you can see what strikes and expirations people are actually picking for spreads, which takes some of the guesswork out. But honestly, the fundamentals matter more than the tool. I’d suggest paper trading a few more to get a feel for how delta and time decay actually play out in real time. What’s your typical max loss target per trade?

Butterflies aren’t a strategy. They’re just a type of spread. Sure, you can use them in a strategy but first you have to have one.

The two important features of flies is that their max profit is is very high, often up to 10x the cost, but probability of max profit is very low. So with any strategy using flies you should expect max profits to be rare and max losses to be common. I sometimes use flies but I’m unaware of any strategy that relies on them and I’d be skeptical if I found one.