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Originally Posted by PaceAdvantage
The long put butterfly is a net debit trade. You're buying the trade, not selling it (thus you don't get the credit deposited to your account when you open the trade like you do when you sell a credit spread).
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Thanks. This is what I originally thought. Early on in the video (at the 5:43 mark) there is a slide of his original 2007 M3 Trading Plan. Rule #5:
"Enter 1 put or Iron Butterfly 50 point wings 15-25 points below RUT price." That's where I got it.
The Iron Butterfly is a credit spread, and the long put butterfly is a net debit trade as you say.
I've looked at both. The Max profit/loss for the long put butterfly (entered 20 points below the close) at yesterday's closing prices is +$3960, -$1060.
Somehow, by adding stock, this brings the profit/loss to +$500, -$500.
