3, 2, 1. Ah, got it. I got a streaming key problem, I think. All right, let's get started here. Hey, friends Ernie here. And this is the zero days to expiration podcast. Episode number 72, 72 episodes. There are 70, there were 71 other, no, I'm sorry. There are 70 other episodes because there is the missing number 70 episode, where did it go?
It may show up sooner or later, but today's episode is about asymmetry while the title of the episode may be a little bit misleading because if you didn't understand what I was saying, The metaphor that I use to pin the tail on the donkey, then you may not understand what asymmetry is all about just from that context.
Of course, pin the tail on the donkey harkens back to when we were children and we went to a friend's birthday party and one of the. Games that the parents set up was pin the tail on the donkey. So you would take a picture of a donkey's behind and you would tape it up to a wall or maybe a tree anywhere.
And then all the kids would take turns and you would blindfold a child and then give them. A little tail, a cutout tail with a pin, a little push pin or something, you'd spin them around and then point them in the general direction of the donkey. That's taped up on the tree and let them go. And their task was to, if they could, if their bearings were quite right, if they had some sort of.
Innate sense or psychic sense. They would try to pin the tail right on the donkey. Now, obviously odds were that they were not going to get it. And that's the whole purpose of the game. There was a small chance that one of those kids would actually pin the tail directly. And the way it really worked is everybody won.
Everybody got a consolation prize, but whoever came closest, got the big Bri. Whatever that was maybe a toy, maybe can't who knows. So what that's really saying is that there is a big prize to be won and the odds of getting it are relatively small, but the risk that you take, the risk that you take is having fun.
So there really isn't any risk per se. So pinning the tail on the donkey, all. Refers to, or pinning refers to a term in options trading that deals with the butterfly or other types of trades where you hit the target, right on the spot. In the case of a butterfly, we have an expiration PNL diagram that kind of looks like a pyramid.
And when we say pin that trade, we mean. The price in the market ended up right at that apex P and L chart, which actually represents the two short strikes in a butterfly strategy. And the reason why that is so important is that when you pin something right on those short strikes at expiration, you are maximizing your profit.
You are maximizing the fun. Now the cool part about all of this is that even if you don't pin it exactly, if you come anywhere close to it, the chances are that you're going to make a great deal of profit relative to the risk that you put on. Now, a lot of people use the butterfly strategy, excuse me, the butterfly strategy as a market neutral device.
And they will put the strategy on. And then hope that price stays there. And when you do that, you don't create such a great risk to reward. And this is what asymmetry is all about. You want to create asymmetry in your position, and there are a lot of reasons for this, but let's just stick with the whole idea.