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Tuesday, December 8, 2015

Core Income Butterfly - a Review

While I have shared and discussed a bunch of free useful tools and websites in the past, I rarely ever write about  premium products out there. In fact, in more than 540 articles that have been published on this site over more than 5 years, only 3 of them, or 0.5% of the total, have recommended premium services/products from third parties.

There are good reasons for this. Trading, and market speculation in general is a very sensitive matter. Recommending a third party service entails risks for me as a writer. If you come to this site, or if we interact on Twitter, the last thing I want is to tell you "Hey you should buy this course, or hey you should subscribe to this newsletter" and then see you lose your ass a few weeks later. I can control every material that I publish on this site. I have zero control over what others do. That's why, if a trading newsletter is making 839942% in the year, I can't recommend it. I can't. Simply because I cannot open the door to the possibility of damaging my audience. Offers to earn affiliate revenue come to me on a weekly basis with the condition of writing a "nicely elaborated" review on the site. I respectfully decline. It got to a point where the "About" page on this site had to be updated, and now instead of my personal story, it starts off by saying: "For any inquiries (except for promotion of trading newsletters, brokers etc) you can contact me at...". What a great sentence to begin an About page.

Today's article is about the Core Income Butterfly by Dan from ThetaTrend.com, and it is not a sales pitch. I hate sales pitches. Furthermore, I don't receive a single penny for writing this article and I have no affiliation with ThetaTrend or the Core Income Butterfly course. I just honestly think the CIB is a solid strategy which provides good opportunities to like-minded students of the markets. The author has been trading for over a decade and a half, collecting his fair share of scars and of course arriving to his own conclusions about the markets. After years feeling uncomfortable with the high risk - small reward positions (Credit Spreads and Iron Condors) he opted for a special flavor of Butterflies and devised a solid trading plan around it.


I had the opportunity to digest the Core Income Butterfly more than a month ago, and it is only now that I am writing this piece. I wanted time to truly digest it, to make the strategy my own, and to incorporate it in my own trading with real money.

I must confess, I truly enjoy the fact that it is a low risk strategy that always shows an attractive risk/reward profile. Of course, low risk - high reward trades always mean a smaller probability of success than high risk - small reward trades. However, with the Core Income Butterfly, the "odds" are artificially increased throughout the life of the position as the market moves. How? by making adjustments. Now, don't scream yet. One of the best aspects of the CIB is that adjustments are very cheap. On any other option selling strategy, when you talk about rolls or adjustments, it usually means "oh oh, something is going awfully wrong, I better turn into catastrophe prevention mode". However, the CIB embraces adjustments by making them an integral part of the strategy, and when applied, the losses are way smaller than when you make adjustments, say, on a Credit Spread or Iron Condor position.

With the CIB you will make several adjustments a month. So, it is a little more active strategy than Lazy strangles or Iron Condors. You may need 2, 3, or 4 adjustments, and none of the losses along the way will drastically affect your results, which is great. The robustness of his approach relies on the fact that, as the market moves, you move your position with it, without giving up the possibility of ending it all up with an overall profitable trade.

Dan has been openly trading the CIB on his site in 2015 showing solid results which can be checked out here. I think we should include him next year in the trading competition along with Jonathan, Bellini and Aram, but I'm afraid he will kick my ass and the dinner bill may become too large.

The video episodes are high quality, as well as the audio. The course also contains a PDF book that explains all the details of the strategy and how to conduct it throughout its different phases. His one-to-one support via email has also been top-notch.

The CIB is definitely a helpful addition to my trading arsenal and a more relaxed type of position if you feel uncomfortable with the greater risk and margin consumed by Credit Spreads, Strangles or Iron Condors. I think the CIB is a nice complement to them in fact, and that's why I have started to trade them in my personal account in conjunction with my other strategies.

Thanks to Dan for putting together this high quality materials and the high-quality support he has provided.

Even if you are not interested in the Core Income Butterfly, still, I am pleased to introduce ThetaTrend to you, where you will find a legit and transparent trader, who has been doing it for a very long time and I always find he has interesting things to say. His free articles can teach you a lot and be of great help.

PS: I have learned a lot from Dan over the years, like, how to invest more tax efficiently (The man is a CPA). It was also thanks to him that I discovered ETF Rotation systems, a much smarter way to invest than passively following an index. Now the Core Income Butterfly: high quality content for a super affordable price. Teachings that will accompany me for the rest of my life.


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