Weekly Iron Butterfly Backtest (Part 7)

In this blog series, I’m backtesting the weekly option trade described here.

At inception on Week #6, the trade looked like this:

The P/L ranged from -$144 to -$837 on this day.

On Day #2, max loss was hit:

The market only had to rally 14 points to force a 26% loss on the initial margin of $4,311.

In the first six weeks of this backtest, we have seen three wins and three losses.  That only tells half the story, however.  The average win has been $515 versus an average loss of $1,032.  That, my friends, is a recipe for disaster!

Time will tell whether these early tendencies persist.