An options strategy built on four trades at one expiration date and three different strike prices. For call options, one option each at the high and low strike price are bought, and two options at the middle strike price are sold. For put options, the trades are reversed. This is a limited risk, limited return strategy that pays off when the price of the underlier remains around the middle strike price. This strategy is essentially a combination of a bull and bear spread.
Related information about butterfly spread:
- Butterfly Spread Explained | Online Option Trading Guide
What is Butterfly Spread? See detailed explanations and examples on how and when to use the Butterfly Spread options trading strategy.
- Butterfly (options) - Wikipedia, the free encyclopedia
Profit from a long butterfly spread position. The spread is created by buying a call with a relatively low strike (x1), buying a call with a relatively high strike (x3), ...
- Butterfly Spread Definition | Investopedia
A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration but three different strike prices to ...
- Butterfly Spread by OptionTradingpedia.com
Learn everything about the Butterfly Spread as well as its advantages and disadvantages now.
- Long Call Butterfly Spread | Butterfly Spreads - The Options Playbook
A long call butterfly spread is a seasoned option strategy combining a long and short call spread, meant to converge at a strike price equal to the stock.
- Butterfly Spreads
The Butterfly Spread is a complex option strategy that consists of 3 legs. The center leg of a Butterfly Call Spread consists of two short near the money (NTM) ...
- Butterfly Strategy | Options Trading at optionsXpress
The long butterfly spread is a three-leg strategy that is appropriate for a neutral forecast - when you expect the underlying stock price (or index level) to change ...
- Iron Butterfly Spread - TradeKing
How to trade an iron butterfly spread . Get detailed strategy tips, setup guides and examples for trading iron butterfly spread options.