Chapter 06 · Section 6.1
Mechanics of a Long Butterfly
To put on the September 40-45-50 long butterfly, you:
d) sell the 40 and 45 strikes and buy the 50 strike.
No. For a butterfly position, you buy (or sell) one each of the outside strikes and sell (or buy) two of the inside strike.
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.