Managing Our Butterfly Hedge in NFLX

<p>Just yesterday, <a href="https://ontt.tv/QLmxU">we put on an interesting earnings trade for NFLX</a>. Our main trade was an at-the-money Short Put Spread, which isn’t looking too strong with the down move in NFLX today. But our hedge component was a Wide Butterfly set below the expected move that is actually profitable today, given the move lower. As a result, we’re put in an interesting position with deciding what to do.</p> <p>Ultimately, we choose to leave our Butterfly on for at least another day, as doing so <a href="http://ontt.tv/2j4munc">gives us multiple ways to win</a> on this trade. Then, we add a new type of Ratio Spread, a 2:3 Ratio, <a href="https://ontt.tv/vw41i">as opposed to simply widening out a standard 1:2 Ratio</a>.</p> <p></p>