Butterfly Spread

What Does Butterfly Spread Mean?
An option strategy combining a bull and bear spread. It uses three strike prices. The lower two strike prices are used in the bull spread, and the higher strike price in the bear spread. Both puts and calls can be used.

Investopedia explains Butterfly Spread
This strategy has limited risk and limited profit.

Filed Under: Derivatives, Options

Related Terms

Bear Spread
Bull Spread
Debit Spread
Iron Condor
Leg Out
Multi-leg Options Order
Option
Positive Butterfly
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