Butterfly Spread
Definition
A limited-risk, limited-reward strategy using four option contracts at three strike prices. Profits from low volatility and price stability near the middle strike.
Example
Long butterfly centered at ATM strike for neutral outlook. Credit Spread Category: Options / Strategy Definition: An options trade where the premium received from selling an option exceeds the premium paid for a protective
Frequently Asked Question
What is Butterfly Spread in trading?
A limited-risk, limited-reward strategy using four option contracts at three strike prices. Profits from low volatility and price stability near the middle strike.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.