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In finance an iron butterfly, also known as the ironfly, is the name of an advanced, neutral-outlook, options trading strategy that involves buying and holding four different options at three different strike prices.
The iron butterfly options trading strategy aims to profit investors during periods of low volatility. Also known as the “short iron butterfly” or the “iron fly,” the strategy makes its ...
An iron butterfly recreates the payoff diagram of a butterfly, but with a combination of two calls and two puts. The option strategy where the middle options (the body) have different strike prices is known as a Condor .
The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. The market can make steep downward moves. Moderately bearish options traders usually set a target price for the expected decline and utilize bear spreads to reduce cost.
By understanding how implied volatility works and how it impacts option prices, you can make more informed decisions and potentially improve your trading results.
The iron condor is an options trading strategy utilizing two vertical spreads – a put spread and a call spread with the same expiration and four different strikes. A long iron condor is essentially selling both sides of the underlying instrument by simultaneously shorting the same number of calls and puts, then covering each position with the purchase of further out of the money call(s) and ...
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