I wonder if this is the hedge it was cracked up to be. Put it on then 2 days of profit. Now loss :(

Thank the gods for paper trading! So I'm a butterfly newbie and trying out this broken one which is supposed to be effective when the IV rank of the underlying is already very high. (Which is what happened to EEM's IV when emerging markets, which were outpacing everything else, lost much of their gains because of the war.)

The intent of this broken butterfly is to exploit an already-steepened put skew, expecting it to flatten. A few days ago I chose this 25DTE broken butterfly and I thought I was ever so careful to follow what I learned when reading The Second Leg Down.

1) The near long put is ATM because of its relatively low IV.

2) The short leg strike was chosen from where the put skew was steepest. Bonus: the 59 strike is also a Fibonacci line. (Maybe that's why the put skew is steep there?)

3) The far long put? I just chose it to tweak the profitability of the butterfly. Is there more thinking that should go into it?

Anyway, I buy this (paper) thing just 3 days ago with the near put ATM. Then for two days the underlying dips and I'm sitting with $1000+ profit. OK, normal. Then today EEM roars up 2% and now the price is back again to what it was when I put on the butterfly. Only now I'm in loss territory to the tune of -$4000. I don't understand why.

It looks like that the price of my far long put is unchanged. And my near long put has lost 40% of its value. I expected that IV crush. But what I don't understand is that the stinking shorts are as skewed or even more skewed than ever. Their price has doubled!

You know I used to think that SPX put ratio backspreads were a bit on the complex side. But now I see that backspreads at least behaved in a way that made me think I was in control.

I'm not even sure what the remedy is when your butterfly goes off the rails like this. Do you sit and wait for expiration when things will be at least a bit better?