On the other hand, some traders refer to this strategy as "Long Iron Butterfly," because its profit and loss diagram looks like the diagrams of a long butterfly spread with calls and a long butterfly spread with puts. However, it is confusing for some traders to think of a position tha...
The term "butterfly" in the strategy name is thought to have originated from the profit-loss diagram. The peak in the middle of the diagram of a long butterfly spread looks vaguely like a the body of a butterfly, and the horizontal lines stretching out above the higher strike and below...