Definitions for "butterfly spread"
Keywords:  bull, strike, strategy, expire, spread
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.
a long strangle with a short straddle
the simultaneous purchase of an out-of-the- money strangle and sale of an at-the-money straddle. The buyer profits if the underlying remains stable, and has limited risk in the event of a large move in either direction.