MoneyGlossary.com
Home  

Butterfly spread

Definition: [crh] Applies to derivative products. Complex option strategy that involves buying a call option with a relativelyDefinition: low strike price; buying a call option with a relatively high strike price; and selling two call options with an intermediate strike price. Essentially, this is a beaDefinition: r call spread stacked on top of a bull call spread. One can also do this with puts. The investor buys a put with a low strike, buys a put at high strike and seDefinition: lls two puts at intermediate strike price. The payoff diagram resembles the shape of a butterfly.

<< Go back