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What is Butterfly Spread Options Strategy Explained about?

1. The butterfly spread is an options strategy used to generate limited profit when the volatility of the underlying asset is expected to remain low. 2. It involves buying a call option with a low strike price, buying a call with a higher strike price, and selling two calls with a mid-range strike price. 3. The maximum profit is achieved if the stock price equals the mid-range strike price at expiration, while the maximum loss is limited to the cost of entering the position.

Author

Medha Mishra

Language

EN