Does anyone trade iron butterflys? I am trying to analyze the pros and cons of these versus iron condors. One disadvantage I can think of is you'd have to cover the short side that is in the money to avoid option exercise and pin risk, also it has a lower win rate. The advantages, more % gains.
I don't trade iron butterflies. It is the same as the regular butterfly. You probably don't want to be crossing the bid/ask trade 4 times if you can do the same trade with 3 bid/ask spreads. The difference between the 2 strategies is that you are trading different areas of the skew/smile.
Otm options are typically more liquid.... Buying the strangle comes at a large cost so I might think to go extremely otm just to reduce margin req otherwise you might just short the straddle only
EliteTraderNYC : I traded some 9-day SPX asymmetrical IB's for a while but no longer trade them. With the Shorts ATM, and the longs many strikes away from the shorts, you get some similarity with ICs, while reaping maximum selling premium. I think you are referring to a Straddle with long (wide) strangle for your IB (correct me if I am wrong). Initial position very close to Delta-Neutral? Do you plan to manage the trades (make adjustments)?