To put on the September 40-45-50 long butterfly, you:
a) buy the 40 and 45 strike and sell the 50 strike.
No. You buy the two outside strikes and sell two of the inside strike.
b) sell the 40 and 50 strike and buy two 45 strikes.
c) buy the 40 and 50 strike and sell two 45 strikes.
d) sell the 40 and 45 strikes and buy the 50 strike.
a)
b)
c)
d)