Chapter 06 · Section 6.1

Mechanics of a Long Butterfly

To put on the September 40-45-50 long butterfly, you:

a) buy the 40 and 45 strike and sell the 50 strike.
• b) sell the 40 and 50 strike and buy two 45 strikes.
  No. This would be a short butterfly position. (It is covered in the "volatile market strategies" section.)
  c) buy the 40 and 50 strike and sell two 45 strikes.
  d) sell the 40 and 45 strikes and buy the 50 strike.