24d • 💡 Trade Ideas & Analysis
Why I like BWB on Potential and Real upward trending stocks
1. What trade you’ve put on
From the image, we’re in CELH with a broken‑wing call butterfly for the 12 Dec 2025 expiry:
+2 48 calls (buy)
-4 50 calls (sell)
+2 51 calls (buy)
All same expiration, different strikes, in a 2 : –4 : 2 ratio.
This is essentially a 1‑2‑1 call fly centered at 50, but with the upper wing slightly wider (50–51 vs 48–50), so the risk is a bit skewed.
2. How this structure reduces theta decay
Compare this to just buying a 48 or 50 call:
Long call alone → negative theta: you bleed premium every day if CELH doesn’t move.
In your fly:
You own 4 calls (2×48, 2×51) but you sell 4 calls at 50.
The short 50 calls have the highest extrinsic value and highest theta, so their time decay works in your favor.
Net result:
Theta is much closer to zero, sometimes even slightly positive when price is near 50.
You’re far less exposed to daily time decay than a straight long call.
So, as days pass, if CELH hangs around the body (near 50), the position can gain from theta instead of lose.
3. Risk–reward profile & “guaranteed” upside cap
Payoff at expiration (simplified, per 1× fly):
Below 48: all calls expire worthless → max loss = net debit paid.
At 50:
48 calls are 2 points ITM
50 calls are at‑the‑money
51 calls are OTM
→ This is where you get max profit.
Above 51:
All calls are ITM and the structure collapses to a small net loss or small gain depending on exact strikes/prices.
Your upside is capped – you don’t participate in unlimited upside like a naked long call.
Because you’re long wings and short more calls in the middle:
Max loss is defined and limited (the debit you paid).
Max profit is also defined and higher than the max loss if you priced it well.
The risk–reward is attractive if:
You pay a relatively small debit.
You think CELH will gravitate toward ~50 by expiration, not explode far above.
4. Why this can be attractive vs a simple long call
Advantages:
Reduced theta drag – short middle calls offset most of the time decay of the longs.
Defined risk – you know the worst‑case loss up front.
High reward per dollar at target – if CELH pins near 50, the return on capital can be very high.
Volatility edge – if implied vol comes in and price is near the body, the short 50s lose value faster than the wings, which helps you.
Trade‑off:
You’re giving up unlimited upside for a high‑probability, defined‑range payoff.
If CELH rips way past 51, you’ll make far less than a simple long call, but you also paid less and carried less theta risk to be in the trade.
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Why I like BWB on Potential and Real upward trending stocks
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