Show Summary Details

Quick Reference

A strategy used by dealers in traded options. It involves simultaneously purchasing and selling call or put options at different exercise prices. A butterfly is most profitable when the price of the underlying security fluctuates within narrow limits but the losses from the strategy are limited. Compare straddle.

Subjects: Financial Institutions and Services.

Reference entries

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.