On Apr 10th I followed the Insanemoney.com trade for this Iron Butterfly. This is a negative vega trade. Meaning that we want the volatility to drop and let the fear in the market increase the premiums of our options to make money. The risk graph shows a similar profit chart and breakevens as a straddle will, without as much margin in use and without unlimited risk.

I'm seeing this as a possible replacement trade for our earnings straddles in the coming future.

This is basically an Iron Condor (two vertical spreads, a bull put spread and bear call spread) with the short call and put being at the money and the longs a little further out. The longs are our insurance in case the stock moves so violently that we get kicked in the shin.

4/10/08 May Iron Butterfly BLPS 350/280 & BRCS 350/420 +45.65

MdrNate