Chapter 06 · Section 6.1

Long Butterfly Call Spread Strategy

1. 1Profit Potential→
2. 2Loss Potential→
3. 3Breakeven Point→
4. 4Mechanics of a Long Butterfly→
5. 5Maximum Potential Gain→

The long butterfly call spread is a combination of a bull spread and a bear spread, utilizing calls and three different exercise prices.

A long butterfly call spread involves:

• Buying a call with a low exercise price,
• Writing two calls with a mid-range exercise price,
• Buying a call with a high exercise price.