Butterfly spreads have limited risk, meaning you can only lose your initial investment. Your maximum return is when the price of the underlying asset remains around the middle strike price.
Investment dictionary. Academic. 2012.
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butterfly spread — The placing of two interdelivery spreads in opposite directions with the center delivery month common to both spreads. Chicago Board of Trade glossary Established by buying an at the money option, selling 2 out of the money options, and buying an … Financial and business terms
butterfly spread — / bʌtəflaɪ spred/ noun an act of buying two call options and selling two call options, with different dates and prices, all at the same time … Dictionary of banking and finance
butterfly spread — Fin a complex option strategy based on simultaneously purchasing and selling calls at different exercise prices and maturity dates, the profit being the premium collected when the options are sold. Such a strategy is most profitable when the… … The ultimate business dictionary
Iron Butterfly Spread — Iron butterfly is the name of an advanced, neutral outlook, options trading strategy that involves buying and holding four different options at three different strike prices. It is a limited risk, limited profit trading strategy that is… … Wikipedia
Butterfly (options) — In options trading, a long butterfly (sometimes simply butterfly) is a combination trade resulting in the following net position: * Long 1 call at (X − a) strike * Short 2 calls at X strike * Long 1 call at (X + a) strikeall with the same… … Wikipedia
Butterfly (Finanzwesen) — Auszahlungsdiagramm zu einem Butterfly Ein Butterfly (auch: Butterfly Spread) ist eine Optionsstrategie, bei der man mit Optionen (d. h. derivativen Finanzinstrumenten) auf sich ändernde bzw. gleich bleibende Preise des Basiswertes… … Deutsch Wikipedia
spread a farfalla — Eng. butterfly spread Tecnica operativa praticata nel mercato delle opzioni nel momento in cui i prezzi del bene sottostante sono stabili o in flessione. Si attua vendendo due opzioni call con lo prezzo di esercizio ( strike ) e acquistandone … Glossario di economia e finanza
butterfly — [but′ərflī΄] n. pl. butterflies [ME buterflie < OE buttorfleoge (see BUTTER & FLY2): in folklore, it is thought to steal milk or butter] 1. any of various families of lepidopteran insects active in the daytime, having a sucking mouthpart,… … English World dictionary
butterfly — butterflylike, adj., adv. /but euhr fluy /, n., pl. butterflies, v., butterflied, butterflying, adj. n. 1. any of numerous diurnal insects of the order Lepidoptera, characterized by clubbed antennae, a slender body, and large, broad, often… … Universalium
Butterfly effect in popular culture — The concept of the butterfly effect is frequently referred to in popular culture in terms of the novelty of a minor change in circumstances causing a large change in outcome.Fact|date=July 2008The term is sometimes used in popular media dealing… … Wikipedia