You are on page 1of 31
Butterfly spread to trap high probability retest move Uptrend eee Pullback Bull Fly 28 Entry Rules Use weekly charts - look for setups after Friday close ... Liquid weekly or monthly options with tight spread ... Underlying trading above 52-week moving average indicates it is bullish in an uptrend ... Completed Hammer candle ... Low of this week must be the lowest low of at least the past 9 weeks ... Bull Fly 28 Entry Rules This week’s close must be above 52-week moving average (low can be below) ... Use call options 28 days out (flexible) to construct a standard 1-2-1 out-of-the-money butterfly spread ... Get this week’s range (H-L) and add that number to this week’s high — this is where the butterfly’s short strike should be ... The credit you get for the two short calls should pay for at least 50% of the long call that is closer to the current stock price ...