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.
• c) buy the 40 and 50 strike and sell two 45 strikes.
  Yes. This spread is put on by purchasing one each of the outside strikes and selling two of the inside strike. To put on a short butterfly, you do just the opposite. Continue
  d) sell the 40 and 45 strikes and buy the 50 strike.