--- title: "Spread the Selloff" slug: "strategies-and-features-spread-the-selloff" description: "In this informative video, CEO Ophir Gottlieb discusses the \"Spread the Selloff\" strategy, also known as the broken wing butterfly credit spread (1x3x2). He delves into the nuances of trading put options on stocks that are in a correction or experiencing technical failure. Gottlieb emphasizes the importance of a long-term focus and having a structured trading plan for successful trading. He guides viewers through the process of setting up alerts for specific stocks and sectors using this strategy, which involves trading put options based on specific market conditions and technical indicators. This video is a valuable resource for traders looking to understand and implement a sophisticated trading strategy in volatile markets." tags: ["Spread the Selloff AI", "1x3x2", "BWB", "Broken Wing Butterfly", "AI-Driven Trading Alerts", "AI-driven trading insights", "AI Trading", "Bearish", "Market Volatility Strategies", "Market Volatility", "Correction", "Put Options", "AI"] updated: 2024-07-25T15:42:42Z published: 2024-07-25T15:42:42Z canonical: "learn.trademachine.com/strategies-and-features-spread-the-selloff" --- > ## Documentation Index > Fetch the complete documentation index at: https://learn.trademachine.com/llms.txt > Use this file to discover all available pages before exploring further. # Spread the Selloff Strategy (1x3x2, Broken Wing Butterfly Credit Spread) This is a discussion of the "Spread the Selloff" strategy, also known as the broken wing butterfly credit spread. CEO Ophir Gottlieb, discusses the importance of having a long-term focus and a trading plan in order to be a successful trader. Ophir takes a deeper look at the Spread the Selloff, also known as the broken wing butterfly credit spread (1x3x2), in this video. He explains the Spread the Selloff strategy, which involves trading put options on stocks that are in a correction, in technical failure, and have downside tail moves. He concludes by explaining how to set up [alerts](/v1/docs/getting-started-with-trademachine-building-your-alerts-portfolio-transcripts) for this strategy in specific stocks and sectors. ### Overview - 1x3x2 short put broken wing butterfly - 3 legs ### Spread the Selloff Strategy (aka: 1x3x2 or Broken Wing Butterfly Credit Spread) Settings - Spread the Selloff Strategy utilizes a custom strategy which is labeled "CML Spread the Sell-Off (Put 1x3x2)" under the custom strategy dropdown menu. #### Spread the Sell-off (aka: 1x3x2 or Broken Wing Butterfly Credit Spread) Open Conditions: - In last 30 days, stock moved down -10% or more - Stock is below SMA 200 Days - 6 month [asymmetry (skew)](/v1/docs/tail-and-skew) of up vs down stock returns below 0 - In the last year, the [kurtosis (tailedness)](/v1/docs/tail-and-skew) of the stock returns has been below 0 ![image.png](https://cdn.document360.io/b73389a5-b202-4bf4-8df2-8c69e8edbb3b/Images/Documentation/image%2869%29.png) #### Details on Options TradeMachine is Selecting for Spread the Selloff Strategy (aka: 1x3x2 or Broken Wing Butterfly Credit Spread): - 1x **long 37 delta** put near **30 days to expiration** - 3x **short 25 delta** puts near **30 days to expiration** - 2x **long 10 delta** puts near **30 days to expiration** ![image.png](https://cdn.document360.io/b73389a5-b202-4bf4-8df2-8c69e8edbb3b/Images/Documentation/image%2867%29.png) #### Earnings Handling for Spread the Selloff (aka: 1x3x2 or Broken Wing Butterfly Credit Spread) Strategy: - [Never Trade Earnings](/v1/docs/earnings-and-trademachine) #### Spread the Sell-off (aka: 1x3x2 or Broken Wing Butterfly Credit Spread) Close Conditions: - [Gains Above 80%](/v1/docs/how-do-stop-loss-and-limit-gains-work-in-trademachine) - Options reach expiration (Close all legs with front month options) ![image.png](https://cdn.document360.io/b73389a5-b202-4bf4-8df2-8c69e8edbb3b/Images/Documentation/image%2870%29.png) ![image.png](https://cdn.document360.io/b73389a5-b202-4bf4-8df2-8c69e8edbb3b/Images/Documentation/image%2868%29.png) #### Open next trade for Spread the Sell-off (aka: 1x3x2 or Broken Wing Butterfly Credit Spread): - [At Normal Time](/v1/docs/what-does-the-and-open-next-trade-at-normal-time-and-re-open-immediately-mean) ![image.png](https://cdn.document360.io/b73389a5-b202-4bf4-8df2-8c69e8edbb3b/Images/Documentation/image%2871%29.png) #### Spread the Selloff Payoff Diagram (aka: 1x3x2 or Broken Wing Butterfly Credit Spread) - At Expiration ![Spread the Selloff Payoff Diagram At Expiration](https://cdn.document360.io/b73389a5-b202-4bf4-8df2-8c69e8edbb3b/Images/Documentation/1x3x2%20pay%20off%20diagram%20at%20exp.jpg) [View Video Transcript](/v1/docs/spread-the-selloff-strategy-1x3x2-transcript) ## Related - [Spread the Selloff Strategy (1x3x2) Transcript](/spread-the-selloff-strategy-1x3x2-transcript.md) - [December 2023](/december-2023.md)