Chapter 06 · Section 6.1

Short a Butterfly

You are short the September 40-45-50 butterfly with the underlying at 45. You:

a) are long and want the market to rally.
b) are short and want the market to fall.
c) are neutral and want the market to sit.
• d) you are neutral but want the market to move in either direction.
  Yes. The position is a neutral one - consisting of two short options balanced out with two long ones. Continue