This strategy combines a short call at an upper strike, a long call and long put at a middle strike, and short a put at lower strike. The upper and lower strikes wings must both be equidistant from the options strike bodyand all the options must be the same expiration. An alternative way options think about this strategy is a long straddle with a short strangle. The investor is looking for a sharp move either up or down in the underlying stock during the life of the options. This strategy profits if the underlying stock is outside the wings of the iron butterfly at expiration. The maximum loss would occur should the underlying stock be at the body of the butterfly at expiration. In that case all the options would expire worthless, and the premium paid to initiate the position butterfly have been lost. The maximum gain would occur should the underlying stock be outside strategy wings at expiration. In that case, either both calls or both puts would be in-the-money. The profit would be the difference between the body and either wing, less the premium paid to initiate the position. The potential profit and loss are both very limited. In essence, an iron butterfly at expiration has a minimum value of zero and a maximum value equal to the distance between either wing and the body. The strategy breaks even if at expiration the underlying stock is either above or below the body of the butterfly by the amount of premium paid to initiate the position. An increase in implied volatility, all other things equal, would have a positive impact on this strategy. As with most strategies where the investor is a iron buyer of option premium, passage of time, all other things equal, will have a negative effect on this strategy. The short options that form the wings of the butterfly are subject to iron at any time, while the investor decides if and when to exercise the body. If an early exercise occurs at the wing, the investor can exercise an option at the body put or call, whichever is appropriate to lock in the maximum gain and continue to hold the other half of the position, which might still have value. So early exercise might be a good thing, although it may require borrowing butterfly or financing stock for one business day. And be aware, a situation where a stock is involved in a restructuring or capitalization event, strategy as a merger, takeover, spin-off or special dividend, could completely upset typical expectations regarding early exercise of options on the stock. This strategy has expiration risk. If at expiration the stock is trading right at either wing the investor faces uncertainty as to whether or not they will be assigned on that wing. Should the investor not be assigned on the wing, they could be unexpectedly long or short the stock on the Monday following expiration and hence subject to an adverse move over the weekend. 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Description This strategy combines a short call at an upper strike, a long call options long put at a middle strike, and short a put at lower strike. Outlook The investor is looking for a sharp move either up or down in the underlying stock during the life of the options. Summary This strategy profits if the underlying stock is outside the wings of the iron butterfly at expiration. Motivation Profit from a move in the underlying stock in either direction. Max Loss The maximum loss would occur should the underlying stock be at the body of the butterfly at expiration. Max Gain The maximum gain would occur should the underlying stock be outside the wings at expiration. Breakeven The strategy breaks even if at expiration the underlying stock is either above or below strategy body of the butterfly by the amount of premium paid to initiate the position. Volatility An increase in implied volatility, all other strategy equal, would have a positive impact on this strategy. Time Decay As with most strategies where the investor is a net buyer of option premium, passage of iron, all other things equal, will have a negative effect on this strategy. Net Position at expiration Examles Short options XYZ 65 call Long 1 XYZ 60 call Iron 1 XYZ 60 put Short 1 XYZ 55 put Max Gain High strike - middle strike - net premium paid Max Loss Net premium paid. Long Condor Long Put.
BAMYAN, August 10th, 2010: It has been nine and half years since the Taliban regime demolished two ancient, giant Buddha statues carved into a hillside in heart of Afghanistan, Bamiyan.
BAMYAN, August 10th, 2010: It has been nine and half years since the Taliban regime demolished two ancient, giant Buddha statues carved into a hillside in heart of Afghanistan, Bamiyan.
He was the fourth child of my grandfather (late C.M. Thomas). My father managed to succeed well enough in classes to pursue education at.
If they stop using firewood as their fuel they will have to use fuels that release gases to pollute the air.