Long Put Butterfly
A butterfly (fly) consists of options at three equally spaced exercise prices, where all options are of the same type (all put or all call) and expire at the same time. In a long put fly, the outside strikes are purchased and the inside strike is sold. The ratio of a fly is always 1 x 2 x 1. The long put fly strategy combines a bear put spread with a bull put spread, where the inside strike is sold twice between evenly spaced outside strikes. 1 OTM put x 2 ATM puts x 1 ITM put.
Fri, Jan 15th, 2021