Petro-Lwa Strategy IX · User Manual

The Long Iron Butterfly

Tight consolidation · Cheap entry · Defined reward

What is this strategy?

The Iron Butterfly is a sniper trade for tight consolidation zones. You buy a put roughly 10% below the market, sell an ATM put, sell an ATM call, and buy a call roughly 10% above. The two short ATM contracts pay for the two wing protections. Maximum profit triggers if price expires exactly at the centre; the wings cap the loss in either direction. Petro-Lwa fires this when price is glued to its 20EMA, the Bollinger Bands are squeezed, AND volatility is rich enough to fund the wings.

When does it trigger?

The Pine indicator PETRO-LWA-IX.pine fires when all of these are true:

SignalDefault
Price hugging 20EMA|close-EMA20|/EMA20 < 2%
Bollinger-Band squeeze (width < avg × 0.7)true
IV Rank rich enough≥ 50

Translation: chart is dead-still, volatility is overpriced — the perfect butterfly habitat.

1

Download the Pine script

⬇ Download PETRO-LWA-IX.pine
2

Install on TradingView

Chart → Pine Editor → paste → Save → Add to chart.

▼ Pine Editor TradingView //@version=6 indicator("PETRO-LWA IX · Iron Butterfly") tight = |close-ema20|/ema20 < 2 setup = tight and squeeze and iv_rank ≥ 50 label.new("🟡 IX · IRON BUTTERFLY") [Save] [Add to chart] CHART · BTCUSD ◀▶ 🟡 BUTTERFLY + ADD TO CHART
3

Read the chart label

A yellow diamond appears under the bar with the live IV-rank, signalling the price is sitting exactly where the butterfly wants it.

EMA20 🟡 IX · IRON BUTTERFLY tight · IV 58 centre at the close · 10% wings BTC/USD · 1D
4

Set up the alert

Right-click → Add alert. Condition: “PETRO IX · Iron Butterfly”. Webhook URL for the bridge.

Create Alert CONDITION PETRO·IX ▸ PETRO IX · Iron Butterfly ▸ Once Per Bar Close WEBHOOK URL https://lasiren-bridge.cryptolwa.app/alert MESSAGE {{ticker}} butterfly armed iv {{plot}} CREATE
5

Execute the options trade on Deribit

Pick a 14-30 DTE expiry. Buy 1 put at -10%. Sell 1 ATM put. Sell 1 ATM call. Buy 1 call at +10%. Net debit (small). Maximum profit if BTC expires exactly at the ATM centre; max loss is the small debit. Take profits at 30-50% of max; close immediately if price moves > 7% from centre.

DERIBIT · BTC IRON BUTTERFLY · 21 DTE SPOT $100,000 · 90k / 100k / 110k · centred trade LEG STRIKE PREMIUM ▶ BUY PUT 90k (-10%) - 800 (debit) ◀ SELL PUT 100k ATM + 1,800 (credit) ◀ SELL CALL 100k ATM + 1,800 (credit) ▶ BUY CALL 110k (+10%) - 900 (debit) NET DEBIT ≈ 1,900 USD · max reward ≈ 8,100 · ratio >4:1

Risk profile

Max LossNet Debit Paid
Max RewardWing Width - Debit
Best MarketDead Range · Rich IV

When NOT to use this

  • Live catalyst within DTE — even a small surprise blows past the wing limits in seconds.
  • Strong trend — your centre strike doesn't stay the centre; the trade expires deep in one wing.
  • Wide bid/ask spreads — Iron Butterflies are 4-leg trades; transaction costs eat the small edge.

Plain-English glossary

Iron ButterflySell ATM straddle + buy OTM wings. Profit if expiry lands at the centre.
Centre StrikeThe shared ATM strike where both short legs live.
WingThe long protection leg, OTM, that caps the loss.
Net DebitThe small cash cost to open. Your max loss.
BB SqueezeBollinger Bands narrow — energy compressed.
EMA20Short-term moving average; "the line" the price is hugging.
ThetaDaily decay; friend to the butterfly buyer once IV crushes.
Pin RiskRisk that price closes exactly at the centre at expiry — assignment chaos.