Iron butterfly - An option strategy with limited risk and limited profit potential that involves both a long (or short) straddle, and a short (or long) combination. An iron butterfly contains four options as is an equivalent strategy to a regular butterfly spread which contains only three options. Example (short iron butterfly): long 1 XYZ May 60 call and 1 May 60 put, and short 1 XYZ May 65 call and short 1 XYZ May 55 put.
Iron butterfly : an option strategy with limited risk and limited profit potential that involves both a long (or short) straddle, and a short (or long) combination. an iron butterfly contains four options as is an equivalent strategy to a regular butterfly spread which contains only three options. example (short iron butterfly): long 1 xyz may 60 call and 1 may 60 put, and short 1 xyz may 65 call and short 1 xyz may 55 put.
Iron butterfly