An options strategy built on four trades at one expiration date and three different...

A strategy involving four contracts of the same type at three different strike prices. A long (short) butterfly involves buying (selling) the lowest strike price, selling (buying) double the quantity at the central strike price, and buying (selling) the highest strike price. All options are on the same underlying, in the same expiration. This strategy is not available in the Trade Finder, but can be constructed and analysed in the Matrix.

An options strategy built on four options with the same expiration date, but with three strike prices. Buying a butterfly means buying a call at one exercise price and buying a put at a higher exercise price, then selling a call and a put at an exercise price between the others. Is used when the underlying asset is expected to stay within a certain range.

Combining a bull and bear spread. In a long Butterfly Spread, you go long one call with a high strike price, long one call with a low strike price, and short two calls with a middle strike prices.

The sale (purchase) of two identical options, together with the purchase (sale) of one option with an immediately higher strike, and one option with an immediately lower strike. All options must be the same type, have the same underlying and have the same expiration date.

A strategy involving three strike prices that has both limited risk and limited profit potential. A long call butterfly is established by: buying one call at the lowest strike price, writing two calls at the middle strike price, and buying one call at the highest strike price. A long put butterfly is established by: buying one put at the highest strike price, writing two puts at the middle strike price, and buying one put at the lowest strike price. For example, a long call butterfly might be: buying 1 XYZ May 55 call, writing 2 XYZ May 60 calls and buying 1 XYZ May 65 call.

A spread taken out in two adjacent futures contracts together with an opposite spread in the later contact and the next maturity contract. This transaction involves placing two inter-delivery spreads in opposite directions with the center delivery month common to both spreads.

a multi-leg option strategy made up of all calls or all puts with three different strike prices

a way to profit if you think the stock will expire near a certain strike price

A strategy to occupy both sides of the market using spreads. It involves going long a bull spread and long a bear spread.

An option strategy combining two option spreads (qv) whereby two options are bought (or sold) at the same strike price (qv) and one option is sold (or bought) at each of an equidistant higher and lower strike price, all for the same expiration.

An option strategy combining a bull and bear spread. Three strike prices are used. The lower two strike prices are used in the bull spread and the higher two strike prices are used in the bear spread. Either puts or calls can be used. This strategy has limited risk and limited profit.

a combination of a bull spread and a bear spread; the strategy normally gives a maximum return and maximum loss

The placing of two interdelivery spreads in opposite directions with the center delivery month common to both spreads.

The sale (purchase) of two options with intermediate strike prices together with the purchase (sale) of an option with a higher strike and another with a lower strike. All options have the same expiration date on the same underlying asset.

A trading strategy consisting of the purchase of two identical options, together with the sale of one option with a higher strike price, and one option with an lower strike price.(All options are of the same type, have the same underlying asset and the same expiration date.)

Established by buying an at-the-money option, selling 2 out-of-the money options, and buying an out-of-the money option. A butterfly is entered anytime a credit can be received; i.e., the premiums received are more than those paid.

Complex option strategy that involves writing (selling) two calls and buying two calls on the same or different markets and several expiration dates. One of the call options has a higher strike price and the other has a lower strike price than the other two call options. If the underlying stock price remains stable, the investor profits from the premium income collected on the options that are written.

Option strategy involving selling and buying two calls on the same/different marketswith several maturity dates.

Applies to derivative products. Complex option strategy that involves selling two calls and buying two calls on the same or different markets, with several maturity dates. One of the options has a higher exercise price and the other has a lower exercise price than the other two options. The payoff diagram resembles the shape of a butterfly.

A strategy involving four options and three strike prices that have both limited...

A Butterfly Spread is implemented by the combination of a bull spread and a bear spread. This combination involves three strike prices, with the two higher strike prices implementing one spread and the two lower strike prices implementing the other spread, and the middle strike price shared by both spreads. There are four different ways of combinging puts and calls to construct a position with essentially the same characteristics. This option strategy has limited risk, but also limited profit potential.

An option strategy that has both limited risk and limited profit potential, constructed by combining a bull spread and a bear spread. Three striking prices are involved, with the lower two being utilized in one spread and the higher two in the opposite spread. The strategy can be established with either puts or calls; there are four different ways of combining options to construct the same basic position.

(i) A futures butterfly spread is a spread trade in which multiple futures months are traded simultaneously at a differential. The trade basically consists of 2 futures spread transactions with either 3 or 4 different futures months at one differential. (ii) An options butterfly spread is a spread trade in which multiple options months and strike prices are traded simultaneously at a differential. The trade basically consists of 2 options-spread transactions with either 3 or 4 different options months and strikes at one differential.

Option strategy using call or put options to limit risk in return for restricting profit potential.

A three-legged spread in futures or options. In the option spread, the options have the same expiration date but differ in strike prices. For example, a butterfly spread in soybean call options might consist of two short calls at a $6.00 strike price, one long call at a $6.50 strike price, and one long call at a $5.50 strike price.

(1) A futures butterfly spread is a spread trade in which multiple futures months are traded simultaneously at a differential. Basically the trade consists of two futures spread transactions with either three or four different futures months at one differential. (2) An options butterfly spread is a combination of a bear and bull spread trade in which multiple options months and strike prices are traded simultaneously at a differential. Basically the trade consists of two options spread transactions with either three or four different options months and strikes at one differential.

A three-legged option spread in which each leg has the same expiration date but different strike prices.