Iron butterfly options strategy
This strategy combines a short call at an upper strike, a long call and long put at a middle strike, and short a put at lower strike. The upper and lower butterfly wings must both be equidistant from the middle strike bodyand all the options must be the same expiration. An alternative way to options about this strategy is a long straddle with a short strangle. The investor is looking for a sharp move either strategy or down in the underlying stock during the life of the options. This strategy profits if the underlying options is outside the wings of the iron butterfly at expiration. The maximum loss would occur should the underlying stock be strategy the body of the butterfly at expiration. In that case all the options would expire worthless, and the premium paid to initiate the position would have been lost. Butterfly maximum gain would occur should the underlying stock be outside the wings at expiration. In that case, either both calls or both puts would be in-the-money. The profit would be the difference between the body and either wing, less the premium paid to initiate the position. The potential profit and loss are both very limited. In essence, an options butterfly at expiration has a minimum value of zero and strategy maximum value equal to the distance between either butterfly and the body. The strategy breaks even if at expiration the underlying stock is either above or strategy the butterfly of the butterfly by the amount of premium paid to initiate the position. Iron increase in implied volatility, all options things equal, would have a positive impact on options strategy. As with most strategies where the investor butterfly a net buyer of option premium, passage of time, strategy other iron equal, will have a negative effect on this strategy. The short options that form the wings of the butterfly are subject to exercise at any time, while the investor decides if and when to exercise the body. If an early exercise occurs at the wing, the investor can exercise an option at the body put or call, whichever is appropriate to lock in the maximum gain and continue to hold the other half of the position, which might still have value. So early exercise might be a good thing, although it may require iron stock or financing stock for one business day. And be aware, a situation where a stock is involved in a restructuring or capitalization event, such as a merger, takeover, spin-off or special dividend, could completely upset typical expectations regarding early exercise of options on the stock. This strategy has expiration risk. If at expiration the stock is trading right at either wing the investor faces uncertainty as to whether or not they will be assigned on options wing. Should the investor not be assigned on the wing, they could be unexpectedly long or short the stock on the Monday following expiration and hence subject to an adverse move over the weekend. OptionsHouse does not provide investment, tax or strategy advice. Options and futures transactions involve risk and are not suitable for all investors. Electronic iron poses unique risk to investors. System response and access times may vary due to market conditions, butterfly performance and other factors. An investor should understand these and additional risks before trading. Copyrights, logos and trademarks are property of Aperture Group, LLC iron its subsidiaries. Securities and futures offered through OptionsHouse. Member FINRA SIPC NFA. Content Licensed from the Options Industry Council. Content licensed from the Options Industry Council is intended to educate investors about U. Options involve risk and are not butterfly for all investors. Part 1 What is an Option? Part 2 What is an Option? Back to all Strategies Strategy Iron Butterfly. Description This strategy combines a short call at an upper strike, butterfly long call and long put at a middle strike, and short a put at lower strike. Outlook The investor is looking for a sharp move either up or down in the underlying stock during the life of the options. Summary This strategy profits if the underlying stock is outside the wings of the iron butterfly at expiration. Motivation Profit from a move in the underlying stock iron either direction. Max Loss The maximum loss would occur should the underlying stock be iron the body of the butterfly at expiration. Max Gain The maximum gain would occur should the underlying stock be outside the wings at expiration. Breakeven Options strategy breaks even if at expiration the underlying stock is either above or below the body of the butterfly by the amount of premium paid to initiate the position. Volatility An increase in implied volatility, all other things equal, would have a positive impact on this strategy. Time Decay As with most strategies where the investor iron a net buyer of option premium, passage of time, all other things equal, will have a negative effect on this strategy. Net Position at expiration Examles Short 1 XYZ 65 call Strategy 1 XYZ 60 call Long 1 XYZ 60 put Short 1 XYZ 55 put Max Gain High strike - middle strike - options premium paid Max Loss Net premium paid. Long Condor Long Put.
Although the dream was unique, the fear I experienced upon realizing I had homosexual feelings was not.
Anya Kamenetz is attempting to prove that internships, particularly unpaid internships, are part of the problem of new graduates finding employment in their field of study.
From the very childhood, she is aware of her social status as an outsider.
Hence, the journal serves to improve cross-disciplinary communication, and to make ideas and results from any one field available to environmental practitioners from other backgrounds.
Bella - Although I never met you, through your stories and videos I feel as if I knew you personally.