Iron Butterfly |
| An option strategy with limited risk and limited profit potential that involves both a long (or short) straddle, and a short (or long) combination. An iron butterfly contains four options as is an equivalent strategy to a regular butterfly spread which contains only three options. Example (short iron butterfly): long 1 XYZ May 60 call and 1 May 60 put, and short 1 XYZ May 65 call and short 1 XYZ May 55 put. |
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