Scope and learning objectives

This article addresses only the multi-butterfly and broken-wing-butterfly order examples described in the supplied claims. It does not establish universal execution rules or guarantee that accepted, triggered, or simplified orders will fill.

  • Distinguish platform acceptance or order triggering from actual execution.
  • Interpret why the speaker separates certain multi-butterfly structures into simpler orders.
  • Compare an automated attempt to exit a broken-wing butterfly with an alternative use of automatic orders to buy a call or put.
  • Identify when a conclusion is limited to a particular strategy, platform, broker, or speaker experience.

01

Acceptance Is Not Execution

The central execution warning is narrow but important: in the described complex butterfly orders, a platform or broker may permit an order without the order ultimately filling. Complexity therefore remains relevant after order acceptance. [4][3]

  • For the described order containing two butterflies with different legs, the speaker warns that the combined order may be difficult to fill even when the platform accepts it. [4]
  • In the three-butterfly example, all three butterflies must close for the combined order to fill, and a broker that permits the order still may not execute it. [3]

02

Separate Familiar Structures When the Example Supports It

For the described two-butterfly implementations, the speaker's execution approach is to reduce the complexity of the submitted order. In the two broken-wing-butterfly example, that general preference becomes a specific method: submit two separate butterfly orders. [4][5]

  • For an order containing two butterflies with different legs, the speaker recommends submitting complex orders as simply as possible. [4]
  • For the described pair of broken-wing butterflies, the speaker recommends two separate butterfly orders that market makers are accustomed to trading. [5]

03

Cascading Triggers Remain Attempts

The thinkorswim example describes an automated attempt to exit a broken-wing butterfly: underlying-price triggers submit progressively more flexible limit orders when earlier orders do not fill. Triggering advances the sequence, but it does not guarantee execution at the specified price. [2]

  • The described workflow links underlying-price triggers to a sequence of progressively more flexible limit orders for an attempted broken-wing-butterfly exit. [2]
  • If an earlier order does not fill, a later trigger can submit another limit order; nevertheless, a triggered order may still fail to fill at its specified price. [2]

04

An Alternative Use of Automation

The speaker reports difficulty obtaining reliable stop-order execution for broken-wing butterflies. In longer-term strategies, the speaker therefore often uses automatic orders to buy a call or put rather than to close the butterfly itself. [1]

  • The reported difficulty with reliable stop execution is the speaker's experience with broken-wing butterflies, not a universal claim about all orders. [1]
  • The stated alternative is strategy- and horizon-specific: in longer-term strategies, automatic orders are often used to buy a call or put instead of closing the butterfly. [1]

Review

Key takeaways

  1. For the described multi-butterfly orders, distinguish permission to submit an order from the ability to fill it. [4][3]
  2. In the specific two-broken-wing-butterfly example, simplification means submitting two separate, familiar butterfly orders. [5]
  3. A cascading triggered-limit workflow can automate repeated exit attempts, but triggering does not assure a fill at the specified price. [2]
  4. The speaker's alternative use of automation—buying a call or put rather than closing the butterfly—belongs specifically to the reported broken-wing-butterfly difficulty and longer-term strategies. [1]

Self-check

Review questions

Why should platform or broker acceptance not be interpreted as evidence that a combined butterfly order will execute?

The described two-butterfly combined order may remain difficult to fill after platform acceptance, while the three-butterfly example requires all three butterflies to close and may still go unexecuted even when permitted. [4][3]

How does the speaker simplify the described order containing two broken-wing butterflies?

The speaker recommends submitting the structures as two separate butterfly orders that market makers are accustomed to trading. [5]

What should a trader infer when a cascading limit order is triggered in the thinkorswim example?

Only that the trigger submitted the specified order within the described sequence; the order still may not fill at its specified price. [2]

How does the speaker's longer-term automation alternative differ from automating a butterfly exit?

Instead of using the automatic order to close the broken-wing butterfly, the speaker often uses it to buy a call or put in longer-term strategies. [1]

Traceability

Evidence index

Canonical source claims used in this guide. Open a session link to verify the underlying passage at its original timestamp.

[1]The speaker finds reliable stop-order execution for broken-wing butterflies challenging and therefore often uses automatic orders in longer-term strategies to buy a call or put rather than to close the butterfly.
[2]To automate an attempted broken-wing-butterfly exit in thinkorswim, the speaker describes cascading underlying-price triggers that submit progressively more flexible limit orders if earlier orders do not fill, while warning that a triggered order still may not fill at its specified price.
[3]The speaker warns that an order combining three butterflies requires all three to close for the order to fill, and that even brokers permitting the order may not execute it.
[4]For the described order containing two butterflies with different legs, the speaker recommends submitting complex orders as simply as possible because the combined order may be difficult to fill even if a platform accepts it.
[5]For the described order containing two broken-wing butterflies, the speaker recommends submitting the structures as two separate butterfly orders that market makers are accustomed to trading.