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Butterfly

Butterfly		The sale (or purchase) of two identical options, together with the purchase (or sale) of one option with an immediately higher strike and one option with an immediately lower strike.
Additional comments: All options must be the same type, have the same underlying, and have the same expiration date.

Related Terms
		Calendar Spread Applying to derivative products, a strategy in which there is a simultaneous purchase and sale of options of the same class ... Vertical spread A spread in which one option is bought and one option is sold, where the options are of the same type, ... Assignment Refers to the option writer's (seller's) obligation to sell or buy a stock or other financial instrument at the strike price ...

 

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