Reverse Iron Butterfly

Volatility

Buy ATM straddle, sell OTM wings.

Performance across all datasets

SymbolReturn %SharpeMax DD %Win %Avg/trade %Trades
SPY+768.6%0.48+119.4%+57.9%+40.5%19
QQQ+1136.6%0.56+122.9%+57.9%+59.8%19
IWM+1267.9%0.59+187.0%+63.2%+66.7%19
DIA+79.2%0.08+159.1%+52.6%+4.2%19
Avg+813.1%0.43+147.1%+57.9%19
Cumulative P&L % — all symbols
Detail:
Cumulative P&L % — SPY

Risk Profile

Max Profit
At extremes
Max Loss
Near ATM
Breakeven
Around ATM ± debit
Outlook
Long volatility

Parameters

ParameterDefaultDescription
wing_width10%Distance to protective shorts

Methodology

Long-vol butterfly that wins when expiry moves away from ATM.

Implementation

# +C(ATM) + P(ATM) - P(wing) - C(wing)