Butterfly Spread

If you’re new to our site, make sure to watch our FREE Online Option Income Trading Video by Going Here. Thanks for visiting!

Butterfly Option Spreads are one of the most ‘robust’ option trades of the ‘main’ option spread income strategies. In other words, the butterfly spread can withstand more ‘abuse’ from a volatile market than [...]

The vertical spread is basic building block of the butterfly spread. In fact, the vertical spread - either in the form of a credit spread or a debit spread is a basic building block of most option spread strategies.
In the case of the butterfly spread, this option trade can be created out of a debit [...]

The butterfly spread is a delta neutral theta positive options trade that performs ideally when used on a stock or index that is range bound or not moving wildly all over the place.
The traditional butterfly strategy is built from two separate option spread strategies: the debit spread and the credit spread - and is composed [...]

The butterfly strategy is one of the most robust and versatile option selling techniques available.
In a lazy, quiet market condition there is very little - if anything - to do to manage these positions - other than watch your 0 day risk graph line rise up as your account grows - then close it out [...]

Butterfly Spread Trades can be composed of all call options, all put options, or both call and put options.
Regardless of how they are constructed - for the most part they appear the same in a trading platform risk graph pay off diagram window - and also for the most part they perform the same while [...]

photo credit: BozDoz
The short strikes of the butterfly spread are usually sold ATM (at the money). Strikes that are at the money have the most ‘Time Premium’. Time premium is what will erode away making the butterfly spread trader / option seller money.
Butterfly spreads are 3 legged trades. Again, the short strikes are sold [...]