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OptionsB
Butterfly Spread
A neutral options strategy combining bull and bear spreads with a fixed risk and capped profit. Profits most when the underlying expires at the middle strike. Traders use butterfly spreads when they expect low volatility and want a defined-risk position with a favorable reward-to-risk ratio.
Example
“She set up a butterfly spread on AAPL with a $150 middle strike, betting the stock would stay range-bound through expiration.”