1. SMB’s Options Training Program Presents:
The Heart Friendly Butterfly

2. Disclaimer
1.       SMB TRAINING is NOT a Broker Dealer.  SMB TRAINING engages in trader education and training.  SMB TRAINING offers a number of products and services, both electronically (over the internet through Smbtraining.com) and in person.  Through Smbtraining.com, SMB TRAINING offers the “Virtual Trading Floor”, a community through which independent traders (subscribers), as well as T3 Trading Group, LLC traders, observe a virtual trading floor environment (as described below) for educational purposes.  SMB TRAINING also offers web-based, interactive training courses on demand.
2.       The seminars given by SMB TRAINING are for educational purposes only. This information neither is, nor should be construed, as an offer, or a solicitation of an offer, to buy or sell securities. You shall be fully responsible for any investment decisions you make, and such decisions will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs.
3.       This material is being provided to you for educational purposes only. No information presented constitutes a recommendation by SMB TRAINING or its affiliates to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities. You are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs.
4.       SMB Training and SMB Capital Management, LLC are separate but affiliated companies.
5.       T3 Trading Group, LLC is a Registered SEC Broker-Dealer and Member of the CBOE Stock Exchange (CBSX  All trading conducted by contributors on Virtual Trading Floor is done through T3 Trading Group, LLC. 7. The risk of loss in trading securities, options, futures and forex can be substantial. Customers must consider all relevant risk factors, including their own personal financial situation, before trading. Options involve risk and are not suitable for all investors.
See the Options Disclosure Document: Characteristics and Risks of Standardized Options. Trading foreign exchange on margin carries a high level of risk, as well as its own unique risk factors. Please read the following risk disclosure before considering the trading of this product: Forex Risk Disclosure. Futures and forex accounts are not protected by the Securities Investor Protection Corporation (SIPC).
6. No Relevant Positions

3. Hypothetical Trades Disclaimer
Please note: Hypothetical computer simulated performance results are believed to be accurately presented. However, they are not guaranteed as to accuracy or completeness and are subject to change without any notice. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Since, also, the trades have not actually been executed; the results may have been under or over compensated for the impact, if any, of certain market factors such as liquidity, slippage and commissions. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any portfolio will, or is likely to achieve profits or losses similar to those shown. All investments and trades carry risks.”

4. TRADING THE HEART FRIENDLY BUTTERLY IN EXTREME MARKET MOVES
PART 3
TRADING THE HEART FRIENDLY BUTTERLY IN EXTREME MARKET MOVES

5. Extreme market moves
The Heart Friendly Butterfly trade is robust and has been adapted to respond to many kinds of market conditions.
Extremely hard moves in either direction in the market, however, will normally cause a maximum loss with most positive theta strategies and this strategy is no exception.
The strategy, nonetheless is built to “fight the good fight” with strong directional moves and can survive and even prosper, under such conditions.

6. June, 2010 Trade

7. Hard, immediate sell-off…..

8. …causes immediate downside adjustment

9. Iron condor structure

10. Put side credit spread rolled 25 points

11. Creating a Wider Condor

12. Plenty of further downside created through the condor roll

13. Another sharp move downwards

14. Trade now returns to iron butterfly structure

15. New Iron Butterfly has wider wings

16. Profit Target Reached

17. 50% of peak profitability 7 days before expiration

18. Extreme months
Depending on many factors, extreme months can be very profitable or constitute a maximum loss situation. This was an example of the former.
The previous month, which included the flash crash of May, 2010, in fact, was a loss which exceeded the maximum loss due to the speed of the market during the flash crash—16%.
This was an example of a month in which the market sold off, fairly quickly, more than 8% and the trade had an outstanding result—17% on planned capital.

19. Market Neutral Trading Strategies
Very often, after extreme moves and losses such as those which occurred during the Flash Crash, the options market, due to high volatility and fear, presents excellent opportunities for strong results in the FOLLOWING month.
This is a numbers game and thus it is very important to………….

20. Get Back On the Horse

21. You WILL have losing months with ANY market neutral options strategy
If you can not emotionally accept that, then you should probably not be trading at all, but you certainly should not trade market neutral options strategies.
This form of trading requires steadily returning to market each month where the market conditions permit entry, regardless of the outcome of the previous month.