The iron butterfly is a popular strategy designed to provide limited maximum profit in exchange for limited maximum loss. This strategy may be viewed as acceptable for those willing to live with limitations on both sides; it may also be seen as unacceptable because profit can never exceed the ...
The iron butterfly is an option strategy that involves two calls and two puts with the same expiration date but three different strike prices. Advertisement. The iron butterfly is an option strategy that can provide a small profit with limited risk. This article will explain the basics of this...
Buying the Belly of the Butterfly A common bond trading strategy when the yield curve undergoes a positive butterfly is to buy the "belly" and sell the "wings." This simply means that bondtraderswill sell the short- and long-term bonds (the wings) of the yield curve and buy the interm...
An iron butterfly is an options trading strategy that involves buying and selling a combination of call and put options to create a range-bound profit zone. Specifically, it consists of selling an at-the-money call and put, while simultaneously buying out-of-the-money call and put options. ...
an at-the-money strike price, and a lower strike price. The options with the higher and lower strike prices are the same distance from the at-the-money options. Each type of butterfly has a maximum profit and a maximum loss. A similar trading strategy is theChristmas tree, which uses ...