I can confirm that the RUT Butterfly trade Ernst is describing is a versatile and robust one. I've seen him trade it with excellent results over recent years, and have learned a lot from his observations.

As one can see, there's a lot to keep in mind. The Greeks are vitally important, especially Vega, Delta, and Theta, and it's difficult to pick up the intricacies without serious study and experience. This way of trading is an interesting contrast to what's primarily discussed here at Effective Volume. In trading the Robot, for example, most of the intelligence is applied to setting up and calibrating the entry; once in the trade, stops simplify the exit. With this RUT Butterfly, on the other hand, some thought must go into the entry, but most of the skill and analysis occurs afterwards, in making adjustments, offsetting with other simultaneous trades, etc.

I think there can be a profitable synergy in combining the two approaches. Knowing the direction of the market is a great advantage, whether in trading ETFs or options, but this RUT Butterfly allows one to profit from normal retracements and periods of choppiness. With luck, we may see how this is so this month as Ernst describes his trade.