All
the strategies up to this point have required a combination of two different
positions or contracts. In a butterfly
spread options strategy, an investor will
combine both a bull spread strategy
and a bear spread strategy, and use three
different strike prices. For example, one type of butterfly spread involves
purchasing one call (put) option at the lowest (highest) strike price, while
selling two call (put) options at a higher (lower) strike price, and then one
last call (put) option at an even higher (lower) strike price.
