Chapter 06 · Section 6.1

The Short Butterfly Call Spread

  1. 1Short a Butterfly
  2. 2Short Butterfly Spread
  3. 3Short Butterfly Spread - Puts or Calls
  4. 4Short Butterfly Call Spread
  5. 5Potential gains or losses
  6. 6Maximum Potential Gains
  7. 7Premiums-1
  8. 8Premiums-2

Like the volatility positions we have looked at so far, the short butterfly position will realize a profit if the market makes a substantial move.

It also uses a combination of puts and calls to achieve its profit/loss profile - but combines them in such a manner that the maximum profit is limited.