Butterfly Spread (Options)

Butterfly Spread - An advanced options strategy combining two spread positions (often a bull spread and a bear spread) to create a position with limited risk and limited profit potential. For example, an options butterfly spread might involve buying and selling call options at three different strike prices, resulting in a “winged” payoff profile. (This strategy is more common in options trading and less in spot forex, but it’s useful jargon for advanced traders.)