Modules for Traders
Options Strategies
A summary of the bear call ladder and the protective put
3. Understanding Bull Ratio Spread
4. Understanding Bear Ratio Spread
A summary of the bull ratio spread and the bear ratio spread
5. Understanding Collar
6. Understanding Calendar Spreads
A summary of the collar and the calendar spread
7. Understanding Iron Condor
8. Understanding Butterfly Spread
A summary of the iron condor and the butterfly spread
9. Understanding Iron Butterfly
10. What is Max Pain and PCR ratio?
A summary of the iron butterfly
Glossary: 12 terms related to options trading strategies
Translate the power of knowledge into action. Open Free* Demat Account
Modules for Traders
Options Strategies
- 1. Understanding Bear Call Ladder
- 2. Understanding Protective Put
-
A summary of the bear call ladder and the protective put
- 3. Understanding Bull Ratio Spread
- 4. Understanding Bear Ratio Spread
-
A summary of the bull ratio spread and the bear ratio spread
- 5. Understanding Collar
- 6. Understanding Calendar Spreads
-
A summary of the collar and the calendar spread
- 7. Understanding Iron Condor
- 8. Understanding Butterfly Spread
-
A summary of the iron condor and the butterfly spread
- 9. Understanding Iron Butterfly
- 10. What is Max Pain and PCR ratio?
-
A summary of the iron butterfly
- Glossary: 12 terms related to options trading strategies
Translate the power of knowledge into action. Open Free* Demat Account
A summary of the iron butterfly
01:36 Mins Read
Check out this video for a summary of the iron butterfly.
Transcript
What is the iron butterfly? As we saw in the previous chapter, it is a kind of butterfly spread. Designed to work in low-volatility environments, the iron butterfly strategy is also a market-neutral strategy. It limits the maximum upside that you can enjoy, but it also helps you limit your downside risk. Basically, this four-legged strategy involves two call options and two put options. All the options need to have the same expiration dates. So, how do you set up the iron butterfly strategy? You buy 1 lot of put options at strike price A. You sell 1 lot of put options at strike price B. Then, you sell 1 lot of call options at strike price B. And buy 1 lot of call options at strike price C. The strike prices A, B, and C should be equidistant And in an ascending order in terms of value. For example, if the strike price A is 100, Then the strike price B could be 500, And strike price C should be 900. So, this sums up the details of the iron butterfly strategy. But there’s always more to learn. So, head to the next module in Smart Money to keep the journey going.
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