The Top 3 Mistakes to Avoid When Trading Put Butterflies

A viewer with a small account wants to get bearish using a November put butterfly, and Tom Preston explains why that's the wrong tool. A butterfly is a target trade, it only pays if the market lands in a specific zone near expiration. So you can be dead right that stocks drop and still lose, because rising volatility keeps the butterfly from expanding and a sharp move blows past your strikes. The smarter bearish bet for a small account is a put vertical in SPY. 📊 tastylive: https://www.tastylive.com/ 📰 Get Tom's pre-market analysis every morning: https://www.tastylive.com/newsletters 📘 FREE Options Strategy Guide: https://tinyurl.com/bp9ms763 📱 Follow tastylive on X: https://x.com/tastyliveshow Chapters 00:00 A small account and a bearish butterfly 00:20 Why a butterfly is a target trade 01:00 You can be right and still lose 01:40 Volatility works against the butterfly 02:20 The smarter trade, a put vertical 02:50 Product and strike selection in SPY 03:30 Risk budgeting a small account 04:00 Prove you can make a winning trade 04:30 Why the VIX keeps falling 05:30 The rule of 16 explained 06:30 How high the VIX could spike #tastylive #confirmandsend #tompreston #putbutterfly #putspread #vix #ruleof16 #optionsforbeginners #optionstrading #stockmarket tastylive is a real financial network, producing hours of live programming every day. Follow along as our experts navigate the markets, provide actionable trading insights, and teach you how to trade. With over 120 original segments, and over 25 personalities, we'll help you take your trading to the next level, whether you are new to trading or a seasoned veteran. tastylive content is created, produced, and provided solely by tastylive, Inc. ("tastylive") and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read all applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange Traded Options Risk Disclosure Statement found at https://tastytrade.com/disclosures/. Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims, including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.