Butterfly spread
TradingDefinition
Three-strike options strategy: long 1 ITM, short 2 ATM, long 1 OTM (all calls or all puts). Profits if the underlying lands at the middle strike at expiration.
Defined-risk, low-cost. Used to bet on a specific price target rather than a directional move. Often quoted in terms of "1-2-1" structure.
Defined-risk, low-cost. Used to bet on a specific price target rather than a directional move. Often quoted in terms of "1-2-1" structure.