The basic setup. Here's how it works. A butterfly spread is a limited-risk, limited-profit strategy. A butterfly spread is a neutral strategy where the trader does not think the stock will move very much. Today, the duo focuses on Butterfly Spreads. In both situations, the butterfly trader suffers maximum loss which is the initial debit taken to enter the trade. Butterfly Futures Spread Strategy For April, 2019 - Buy -CLM19+2*CLZ19-CLM20. As such, it joins countless other options strategies that use spreads to mitigate both risk and profit. Commissions Use SeasonAlgo to find interesting trading strategies and get another advantage on your side. Tune in as the team walks through what a butterfly spread is, what environment to use them in, and how to set them up. Then, get a real time example of this neutral strategy in US Treasury futures like /ZN. Note: While we have covered the use of this strategy with reference to stock options, the butterfly spread is equally applicable using ETF options, index options as well as options on futures.
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